Finance Committee on April 9th, 2020

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

I'll ask the Canadian Chamber or Mr. Kelly regarding partnership earnings and the fact that partnerships wouldn't necessarily appear to qualify under the wage subsidy program. Would you support temporarily allowing business partners to become wage-earning employees?

[The Chair, Liberal, Wayne Easter]

Mr. Kelly.

[Daniel Kelly]

Yes, we absolutely do. There are many businesses that draw dividends from their firms and not a salary and, therefore, their personal income will not be covered by the wage subsidy, whereas if they paid themselves a wage, it would be covered. Therefore, I think there should be the ability for business owners and family members in the business to convert that on a similar basis—not having them, as Kim was saying, just decide to pay themselves a million-dollar salary and have that covered, but, within the confines of the program, allowing them to convert to a salary what they might have taken in dividends during this period, so that the business owner has some income for himself or herself.

[The Chair, Liberal, Wayne Easter]

We'll have to end that round there because we're a little over time. I would mention, though, on the 30%—this wasn't mentioned by anyone—that the 30% has been dropped to 15% for the month of March. I hope people know that it's only for the month of March. Maybe that will change too, but the 30% has been dropped to 15% for the month of March.

I'm sorry, Sean Fraser, I made a mistake. I'm going to have to drop you down the list because Ms. Annie Koutrakis is first on the Liberal list.

Annie.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

I would like to thank all the witnesses for their presentations at today's finance committee meeting. I hope that they and their families are staying healthy and safe. I have two questions. The first is directed to the Canadian Chamber of Commerce and to the Quebec Employers' Council.

My second question is for the Fédération des chambres de commerce du Québec and the Canadian Credit Union Association.

First, based on the feedback that we see from your members, how reassured are they in general that the federal government is doing what is necessary to keep the economy going before we get to the recovery phase, given that the programs are adding close to $300 billion in relief, or 15% of GDP?

Here's my second question. How are your members reacting to the recent announcement that the eligibility requirements for the Canada emergency wage subsidy have been expanded? For example, Air Canada announced yesterday that it plans to rehire 16,000 employees.

[The Chair, Liberal, Wayne Easter]

Okay. Who wants to go first?

Susanna, you go ahead first, and then we'll go to Yves.

[Susanna Cluff-Clyburne]

What we're hearing right now from our members is a lot of confusion and a lot of questions. I think it goes back to what Mr. Moody was saying in his presentation, which is that the complexity is really causing a lot of concerns right now, so it's really too early to say.

All we're hearing is “What about this? What about that? What does this mean? What does that mean?” So I think it's really too early to make an assessment of whether enough is being done. I think everyone agrees that the government has acted with great speed, which is appreciated, but as in everything—and I think one of the other presenters said it—the devil is turning out to be in the details.

If you were to ask that question in another couple of weeks, I would probably have a much more fulsome answer for you, but right now we just don't know, because people are trying to sort it all out.

[Annie Koutrakis, Liberal, Vimy, QC]

If it's okay, it would be really great if you could come back to us with some figures, when you do have them. I think that would be helpful for everybody.

[Susanna Cluff-Clyburne]

I would be happy to do that. We're actually in the field right now with a Statistics Canada survey that we're partnering with them on, so we should be in a position to do that.

[The Chair, Liberal, Wayne Easter]

You can send that to the clerk, Susanna, and he'll distribute it to the committee.

Mr. Dorval.

[Yves-Thomas Dorval]

First, most of our members were very pleased when the government announced the Canada Emergency Wage Subsidy of 75%. It should be noted that, although a number of members will use them, the vast majority of members weren't necessarily very satisfied with the loans and loan guarantees, since they involve working capital, short-term cash flow and layoffs. So the members are very happy. Of course, the latest improvements announced by the Federal Minister of Finance this week were also extremely well received. I must tell you that the CPQ is a non-partisan organization.

That said, there are certainly issues—and several were brought to your attention—regarding the need for clarification to ensure a proper understanding of the matter, or regarding uncertainty and the ability of businesses to better define certain aspects. We often receive two types of calls: what am I allowed to do and how do I proceed?

Our role as an organization is to help our members to find answers and to be able to follow up.

As an organization, we also receive complaints, of course. Most of the time, these complaints come from businesses that fall through the cracks. That's normal. It's difficult to tell you statistically how many businesses will be happy, but certainly some can't apply. At the same time, the government won't be able to meet all needs with its current approach. We understand this. However, I believe that improvements can continue to be made.

Lastly, we're becoming concerned about the fact that we must keep going. If you speak of deferrals, tax remissions, taxes and contributions, and if the recovery is very slow, many businesses won't be able to meet their tax and other obligations by August 31. Additional deferrals must then be considered.

[The Chair, Liberal, Wayne Easter]

Annie, you have time for one question.

[Annie Koutrakis, Liberal, Vimy, QC]

Just as a point of clarification, I meant to ask Mr. Kelly the first question but gave an incorrect witness name. I apologize for that.

Mr. Kelly, would you be able to provide some comments on my first question?

[The Chair, Liberal, Wayne Easter]

Do you want to summarize it, Annie?

[Annie Koutrakis, Liberal, Vimy, QC]

Yes.

Based on some of the feedback you've received from your members, how reassured are they in general that the government is doing everything it can to make sure that we're looking to when the recovery stage starts, given that we've already invested $300 billion in relief?

[The Chair, Liberal, Wayne Easter]

Mr. Kelly.

Un-mute your mute button, Dan.

[Daniel Kelly]

Thank you, got it. I've been laughing at all the reporters and now I'm doing it myself.

It is an incredibly difficult job that you have to try to get the balance right between dealing with the health care emergency and dealing with the economic emergency that COVID-19 has created. I think the government has been moving positively toward getting the measures right for the emergency phase, and I think many of the right tools are in place.

The big gap that we see right now for our members is with respect to dealing with some of their fixed costs, most notably rent. That is a huge concern for small business owners and does fit in with the nature of your question as to what's going to prepare us for the future to help us recover as quickly as we can. Wages are the largest expense. Fixed costs like rent are the second-largest expense in most small companies, and that's where the shoe is pinching. The emergency business account can play a role. We like the $10,000 forgivable portion of that.

Provincial governments need to step up to the table as well. We also need to work on an orderly plan to allow small businesses to reopen in a safe manner because, with the emergency services rules as they are, if everyone was prepared for this to be a couple of weeks and that couple of weeks is now into a couple of months, a third of our members are telling us that they will not survive and will permanently close their doors, so your point is an excellent one.

I don't think we've put enough attention on that piece yet to try to ensure that businesses are well prepared to reopen, but I'm encouraged that the Prime Minister was starting to talk about it this week.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you all.

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

Mr. Ste-Marie, you have six minutes.

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

Thank you, Mr. Chair.

First, I want to welcome all the witnesses and thank them for their presentations.

We're learning a great deal. We can see from your presentations how much the health crisis is significantly affecting our economy. We can also see the importance of acting quickly.

Mr. Milliard, when you made suggestions and identified possible solutions, you spoke of the importance of extending the wage subsidy and support measures to over three months, if necessary. You also spoke of the importance of ensuring greater flexibility in terms of the need of justify the loss of revenue to access the wage subsidy. A step was taken in this direction. However, I want you to elaborate on this and to provide examples of what could be done.

I also greatly appreciated your comments on start-ups. You suggested that we look at future revenue rather than past revenue and establish a loan that can be converted into a grant if jobs are maintained. I want you to elaborate on this.

I also want to know whether you think that the current proposal for covering the fixed costs of SMEs is adequate. What can we introduce?

The question is for Mr. Milliard. I then want to hear from Mr. Kelly from the CFIB or from Mr. Dorval from the Conseil du patronat du Québec.

[The Chair, Liberal, Wayne Easter]

If I could just interrupt for a second, somebody has some background noise. Could you mute your phones? It almost sounds like somebody is playing in the kitchen or kids are playing, so mute all your phones.

Okay. Go ahead.

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

Mr. Milliard, can you respond?

I then want Mr. Dorval or Mr. Kelly to add to the response.

[Charles Milliard]

Thank you, Mr. Ste-Marie.

You asked many questions. I want to share my short speaking time with my colleague, Alexandre Gagnon.

I want to say that we welcome the drop to 15% for March. However, quite frankly, this should be the case for April and May, in order to include even more small businesses affected by this crisis. Whether the drop is 15% or even 30%, some businesses, such as professional services firms, have trouble demonstrating this within the three-month period, given the nature of billing and payment cycles. An extension would be needed.

In terms of SMEs, our organization and other organizations are very pleased with many of the programs currently available, particularly the SME loan and guarantee program with the BDC.

We're wondering about a number of issues. Will the money be allocated on a first come, first served basis? The amounts aren't unlimited. Will it be based on the real needs of businesses or will there be a territorial representation factor? Otherwise, some parts of Canada may not receive their fair share of the total amount.

I'll leave the floor to my colleague, Mr. Gagnon.

[Alexandre Gagnon, Director, Labour and Occupational Health and Safety, Fédération des chambres de commerce du Québec]

Good afternoon. My name is Alexandre Gagnon.

Charles Milliard said a great deal. However, I want to emphasize that some professional services employees and even some manufacturers have an order book and that they can send out invoices for March or April. They'll be affected in the future. They'll have trouble finding new customers after the crisis, which will make the impact even more significant in the ensuing months. If businesses could receive three months of wage subsidies in May, June and July, for example, instead of in March, April and May, depending on the situation of each business, this could offset major losses when they experience the real impact of the crisis.

[The Chair, Liberal, Wayne Easter]

Mr. Ste-Marie.

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

Do Mr. Kelly or Mr. Dorval have anything to add?