Finance Committee on April 8th, 2020

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you, Mr. Chair.

Thank you to all our witnesses who have come forward today. You have an extraordinarily important role in the Canadian economy, so we appreciate your criticisms, your compliments and suggestions about how to move forward right now during the crisis, but also coming out of the crisis.

My first questions will be for Ms. Travis.

Thank you very much for being here, Ms. Travis. I have three questions I want to ask, given the importance of Unite Here among hospitality workers across the country.

My first question is regarding the issue that you raised around financial relief. You quite properly pointed out that in the United States, companies that get the financial relief have conditions. They can't pay dividends. They can't do stock buybacks or executive bonuses. They can't source offshore jobs. All of those conditions are fundamentally important to ensure that coming out of the crisis the money is used properly, really putting workers first, as you so eloquently said.

How important is it to have those conditions as well for the financial relief that will be going to some key industry sectors in the coming days and weeks?

You mentioned the Canada emergency response benefit and the fact that it doesn't cover wage replacement. There's also an increasing concern that many people can't access it at all.

Do you believe it would be easier just to provide the emergency benefit to everybody like other countries are doing as a first step to providing the supports?

My final question is around what many people are talking about, a courage bonus for front-line workers, including your members, who are working on the front line making sure that Canadians get the food and supplies, and get the support in the health care system. There should be a courage bonus paid to those workers to ensure they're getting the supports they need for the sacrifices they're making on behalf of the country as we fight the coronavirus.

Do you believe that would be something the government should be considering so that we can support those front-line workers fully?

Those are my three questions to start.

Thank you.

[The Chair, Liberal, Wayne Easter]

Ms. Travis.

[Michelle Travis]

To take the first question regarding financial relief and putting conditions on that, we do think that's important. In the States, it will be critical to ensuring a path for workers to continue to stay attached to their jobs and it can help toward a path to recovery. We've seen comments from this government with the same goal of the wage subsidy program, that it is offering this program to ensure that workers remain attached to their jobs because it understands how important it is that we are able to, more quickly, return to a recovery down the road.

With regard to the types of conditions that are attached, there may be some differences depending on the sector, but we do think that at a minimum there has to be some commitment to ensuring that workers are brought back if they've been laid off and some details about how that's going to work. We're also seeing workers lose their medical coverage at a time when we're in the middle of a global pandemic. Workers need access to their prescriptions when we're in the middle of a health crisis. Is the government going to make sure workers are able to continue to access that kind of coverage when they need it?

In terms of your second question regarding the CERB, yes, we recognize there are a lot of folks who have fallen through the cracks and need to have access to an income supplement. That $2,000 a month is going to be critical for folks who wouldn't otherwise apply. We know there's been some talk about extending it to folks who work less than 10 hours a week. There are other folks who wouldn't be eligible for whatever reason. Yes, we do think that they need to be able to access some benefit, and we really should be opening it up to a broader swath of workers.

I think it's remarkable, and I hate to say it, but the U.S. is actually offering more money to workers than Canada and that's surprising to me. For a number of reasons [Technical difficulty—Editor], but I think that every household, every individual under $75,000 in salary will be getting a $1,200 cheque. That's regardless of whether they've lost their jobs. Then there are going to be folks who are getting employment insurance. There's an additional $600 top-up that's going to be in place for the next, I think, 13 weeks. That's going to help a lot of low-wage workers or hourly wage workers get through the next few months.

For the hospitality industry in particular, as folks have mentioned before, it is going to be a long recovery. We have to have a sector-specific solution to deal with the challenges that the industry is facing for workers and their employers. We want to work together to try to figure out what makes sense for that sector.

In terms of the courage bonus, yes, you're right. Our members who are continuing to work in hotels are housing and feeding guests who are medical professionals or quarantined travellers. I have to tell you this: Workers have been terrified to work at some of these places because they're concerned about the health and safety risks. We're spending time trying to work very closely with the governments that are commandeering the hotels and the health officials to make sure those are safe places to work. In order to attract workers to work in hotels at this point in time, it would help to have a courage bonus but also to put in place very strict health and safety guidelines so that folks feel comfortable working there, because they are very scared about picking up the virus and bringing it back home, as anybody would expect right now.

[The Chair, Liberal, Wayne Easter]

Thank you, all. We'll end that round there.

Turning to the five-minute round, we'll start with Mr. Baldinelli.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Chair.

Let me begin by thanking all of the witnesses for appearing and presenting their views on what is, for me, such a hugely important sector of the economy.

I am fortunate enough to have been born and raised in Niagara Falls, so I know the importance of the tourism community. In fact, my community itself is the number one leisure tourism destination in Canada. We employ over 35,000 people and we have 16,000 hotel rooms in our community. We probably get about 14 million people who visit here annually, and that generates over $2 billion in receipts.

Almost immediately that has disappeared. We need to work together to ensure that we put together some programs that can be of assistance not only immediately, but also to see us forward in the recovery.

My question first is for Ms. Grynol.

Susie, I was really interested in some of your comments, given the unique situation of our hotel sector. We're talking about thousands of hotel rooms and properties, many of which are owned by individual families, which is unique in a number of areas. They're not owned by corporate entities. Here in Niagara, we have every chain and franchise you could ask for, but they're owned by just a few families.

As the sector has grown, so have they. They have invested hundreds of millions of dollars in the community. They're heavily leveraged, so the notion of liquidity—that term is being used so often. I was interested in some of the comments that you mentioned about carve-outs and programs such as expedited loss and carry-back.

The notion in your March 23 letter to the government about the waiving of the GST/HST for the first quarter kind of builds on something that the Conservative Party has been talking about recently and my colleague mentioned the HST refund for the previous year.

I was wondering if you could expand on some of that and maybe touch on the example of Niagara as well.

[Susie Grynol]

On the first point, which is the carve-out that the U.S. has achieved, I think that just makes sense here in Canada because of the structure that you're referring to where you have a concentration of hotels that would be owned by one family, in the case of Niagara, or a couple of families. That situation is not unique to Niagara. It's really important that we allow funding to flow on a property-by-property basis. Those are, indeed, individual business units, even if there might just be one owner who owns a few of those properties. If they're not looked at as individual businesses, you have to spread the loan across all of those properties and you put all of them at risk, because there just wouldn't be enough funding to cover what would be needed. That recognition did take place in the U.S. and we firmly believe that it should happen here in Canada.

On the matter of the GST, I'm certainly familiar with what's been put forward by the Conservative government of Ontario in terms of sales tax over the last six months and refunding that. Certainly that is a lever that could be considered by the government, but it's effectively a loan that wouldn't have to be paid back.

Our idea here on the loss carry-back is that we would be getting these refunds anyway, so why don't we just allow businesses to bring forward the year-end? It could be done very expeditiously. An assessment could be produced almost overnight. CRA already knows what the financial status is of these companies, what their profitability was last year and reasonable estimates for where they could be for this year. Those funds are going to be coming to the company anyway, so why don't we just let that happen now? Expedite those funds so that we can get liquidity in the pockets of the people who need it most.

[The Chair, Liberal, Wayne Easter]

Tony, we have time for a quick question.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

My question is for our panellist from Unite Here.

One of the questions and concerns that we have here in the community, and it seems to be changing, revolves around the CERB benefit. Niagara has a lot of workers who are seasonal in nature. They are laid off in the winter, and right about now, they would be coming off their layoff notices.

When the government started putting together the CERB, during the emergency session they indicated to us that people who are coming off layoffs can apply for the CERB benefit. This past week we've found out that may not be the case. We are still trying to get clarification, and we are getting a number of calls from seasonal tourism workers who are worried that they might not be eligible for the CERB.

Have you heard anything else on that?

[Michelle Travis]

Folks are starting to apply this week. We're starting to hear from workers about what their experiences are or what they're being told. I'd say, for seasonal workers in particular, that's going to be a real concern because they're going to need some access to cash in order to get through this period. We think they have to be able to tap some sort of income supplement here, like the $2,000 CERB, in order to get through this period.

[The Chair, Liberal, Wayne Easter]

Okay, thank you.

We'll turn to Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair.

Good afternoon, everyone. Please everyone stay safe. The safer we are, the quicker we'll get through this and then hopefully the quicker we can get back to normality and start attracting visitors to come back to Canada, because we know 2019 was a record year for us.

I want to give two quick shout-outs, first of all to the Northwest Territories tourism association. As a finance committee member in the prior session of Parliament, we had a chance to visit the Northwest Territories. I believe we went up to Yellowknife for a set of hearings during finance committee travels. It was the first time I had been up north and it was absolutely stunning to see. The hotel was full of tourists and we need those folks back. Secondly, thank you to everybody who's on the call and putting forward their ideas. We are at a very unique time.

I agree with a lot of the good ideas being put out today. I agree that, in terms of the duration of the recovery of the tourism and hospitality sector, whether you're talking about your local banquet hall or your local hotel or tourism operator, they're going to need help and we need to be there for you, so please continue putting forward those ideas.

I want to ask, starting with the Tourism Industry Association of Canada, about the longer term, how we compete against Japan, Europe or the United States, or California if I go into the sub-regions, in terms of attracting people from overseas to come to Canada. We know that we want those high-quality, high-margin travellers. If we could think of three things that we need to do, not only short term but longer term, to get those numbers back up, what would be those three ideas that you would put forward?

[Charlotte Bell]

I believe that we're going to need some sort of recovery package with incentives like other countries are doing, incentives to attract people to visit Canada, so that if I have a choice between a variety of countries, I'm going to come here because I'm going to get a deal. Like I said, in other places governments are subsidizing room nights or they're subsidizing activities or attractions and helping make those things more affordable so that they are competitive. We also have to keep doing a very good job on an aggressive marketing campaign in order to get those people back.

Another thing that we've been advocating for, for a very long time, is visa access. Canada does not rank very high in terms of visa openness and if there was ever a time.... I think we're still 121 out of 140 countries. We don't rank very well. It is a little more difficult for people to get here. I think that at this time, when we're going to be competing with a number of other countries that are going to be thinking about all the ways they can attract visitors from everywhere else, we have to be looking at our access policies and make sure that we're doing—

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Charlotte, if I can just jump in, there are two sectors in Canada that I'm worried about, obviously, the first being tourism and hospitality, and the second being the charitable sector. These two sectors employ literally millions of Canadians.

I think we've done some really good things. We've provided ground lease relief payments to the airports, which is $330 million that, in fact, will be passed on to people flying, which will lower the cost of flying within Canada, which would be great. We need to work with Destination Canada in terms of providing funds to those marketing agencies to get folks here and some of the ideas that you brought forward.

I wanted to touch upon the Hotel Association of Canada in my remaining time—

[The Chair, Liberal, Wayne Easter]

Make it quick.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Yes, absolutely.

How can we maintain the contact or the arrangement between the employer and employee at hotels across Canada? We know that there was a labour shortage before the pandemic hit, and we want to ensure, coming out of it, that the labour supply is there and that those very hard-working folks at the hotels are there after this pandemic is over and everyone gets back on their feet.

[Susie Grynol]

We share the same goal. The first issue I heard about from hotels when this crisis hit was, “We're so worried about our employees. We need to take care of them. We need to have them back.” That was their biggest crisis. They're the backbone of our industry and that remains at the forefront.

The wage subsidy is a great program. It is absolutely going to help, and our members are going to use it. The only issue I would flag for members to consider at this point is that we want to bring them back today, but we know that it could take three to six weeks, and there's absolutely no cash flow. What do we do about the working capital between now and six weeks from now if we want to bring people back today? We know it's going to be backdated to March 15, but that's not the issue. The issue is being able to cover their pay, to Ms. Travis's point, during this interim period while they have bills to pay. Certainly we share the same goal, and we want those employees back.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you very much for that round.

We turn now to Mr. Cumming.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, and thank you to all the witnesses.

There is no question that this is a sector that's been hit harder than probably any other.

I want to direct my questions to Ms. Grynol on a couple of things.

First, I want to correct something. The proposal we made regarding the GST refund was not a loan. The intent of that was to inject cash flow into companies, small and medium-sized businesses.

There has been very significant investment into the banks to create greater liquidity. Can you give us some idea of what kind of reaction you're getting from your members regarding negotiations with banks on deferrals or modifications on loans? Can you give us some sense of how that's been working?

[Susie Grynol]

It is a real mixed bag at this point. One of the challenges is that these programs are in their early days, their infancy, and so the banks are telling a lot of our members that we just need to sort of wait and see whether or not they will actually qualify. In addition to that, we're also hearing, unfortunately, that we're just not a priority sector, which is a real problem.

I would say the other issue is that we're also really risky. If I'm a bank, I'm not lending to the hotel industry or the tourism industry right now either, because when our revenue is down by 90%, we have virtually no cash coming in the door. We're not a good customer for the banks, and so one of our key recommendations was for the government to actually fully back any loan that would be provided to our sector to take out any of the risk factor that would cause the bank to be hesitant to provide a loan to us, to take out that hesitation altogether.

The other piece, again, is the priority access. The system is being just overrun, and we need to make sure that we get the money into the hands of the people who need it most. That's why we're recommending that the same criteria or something similar to what's being used in the wage subsidy program also be applied for access to liquidity. So we're not going to look at your account unless you've seen a 50% drop in revenue or something similar to that so that we can make sure we get the money into the hands of the right people. Even a few weeks or days is going to make all the difference in the world.

[James Cumming, Conservative, Edmonton Centre, AB]

As we wend our way through this crisis, can you offer any comment on any incentives there might be to create behavioural change or to try to encourage investment in the industry? I think one for businesses might be to increase the deductibility of entertainment expenses to try to get money going back into those sectors. Can you comment on that?

[Susie Grynol]

Yes, I think there are a lot of different options we can look at to incentivize travel and stimulate, for lack of a better term, the sector in the recovery period. Certainly, there's providing credits against hotel rooms to make sure they're more affordable, and providing travel credits and other forms of incentives. There are a lot of ideas on the table that I think we probably need to work through, and we need to come back with some specific asks for this committee and the government to pursue. Really, our focus at this point has been just to keep these businesses open in the first place. We're actually not sure if there's going to be a recovery if they shut down.

[James Cumming, Conservative, Edmonton Centre, AB]

Maybe I'll direct the same question toward Unite Here, on trying to encourage behaviours. You talked a lot about keeping people employed. Do you have any recommendations on how we can get the spend back after COVID-19, so these businesses can actually start generating revenue to keep those people employed?

[Michelle Travis]

I think what Ms. Grynol put out is very interesting. We would like to learn more about what the industry is talking about and be a partner in that.

I don't have a particular recommendation on what the incentives should be, but as a stakeholder we do want to be a part of those discussions and to be helpful. We would like to work with the industry and partner up to figure out how we can get our industry moving again, because our members want to get back to work. The businesses want to be running again.

I don't have a solution, but we do want to work together to figure out what will work. We also want to look to other countries to see what's been effective or what are some creative ideas to get the industry moving again.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you.

Thank you, all, for that round.

Mr. McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

My question is for Cathie Bolstad from NWT Tourism.

I heard your presentation. Thank you for that. It really paints a good picture of where we are at in the north. We were all proud to see the level of growth and tourism in the last while. It's very difficult to watch all this start to crash. We've always known we have huge potential in the north, and we were doing fairly well on the indigenous tourism side. That's another area that has a huge potential also.

What are some of the elements of the government's response, whether it's the CERB or the wage subsidy, that have been received well by the northern operators? Are there ways in which the response could be improved?