Finance Committee on April 9th, 2020

[Susanna Cluff-Clyburne]

Well, from our perspective, what we're hearing from our members is that the banks may need a little prodding from the government, particularly for the BCAP, as well as the Canada emergency business account.

What we're hearing anecdotally is that businesses are starting to make inquiries about the official process for the fund that started today for the emergency business account. The banks are using the same criteria for assessing these loans as they would be using for their shareholders' money or their investors' money to lend out the money. What is particularly galling to some of our members is that this is actually taxpayer money that is underwriting these loans.

We've suggested that the government ease up on the eligibility criteria, and also be more flexible in terms of, for example, as has been talked about, the definition of payroll criteria. Some entrepreneurs pay themselves through dividends, which results in the issuance of T5 documentation. That is not being accepted currently by some banks as eligible payroll.

I think the government needs to help the banks be a bit more open to some of this help that businesses desperately need.

[The Chair, Liberal, Wayne Easter]

Mr. Kelly.

[Daniel Kelly]

Yes, there are a few things from us on that front, in addition to supporting all of the things that Susanna just mentioned.

Dividends are featuring very heavily. I'm besieged with calls from business owners who have paid themselves with dividends. They have very few staff, or they contract out work, as in the case of a construction company. They're ineligible for the Canada emergency business account. That is a government policy, I believe, and something that needs to be fixed.

I also suggest that banks should be asked to add $5,000 to the Canada emergency business account. With the federal government contributing $10,000 that's forgivable, the bank could be asked to contribute $5,000, and the provinces should be asked to contribute some money to that as well. I think it would be a terrific vehicle for them and it would help.

I believe banks should also do two other things. They should automatically increase the lines of credit of the businesses that already have them. That would be very helpful.

Finally, just as a completely different proposal, Visa and Mastercard have increased the limits for tap transactions from $100 to $250, but the holdback to that is that the banks that issue the card need to make that happen. Otherwise, Visa's and Mastercard's efforts are not going to accomplish anything. Also, Interac needs to do the same thing. Given that there are large grocery [Inaudible—Editor] right now, if everybody could tap their card at the counter when they're buying their groceries, you're going to have a lot fewer fingers on keypads. That would be a measure to protect people against COVID. Raising those tap limits to $250 would be a very, very helpful thing for many small firms, and of course for the public.

[The Chair, Liberal, Wayne Easter]

Very quickly—

[Susanna Cluff-Clyburne]

It's Susanna again. I apologize, but perhaps I could add one more thing.

With so many businesses now moving into non-customer-facing transactions, a lot of credit card transactions are being conducted over the phone. A 1% additional fee is charged by the credit card company for those manual transactions. If that were waived during the course of this crisis, that would very much help small businesses.

[The Chair, Liberal, Wayne Easter]

Okay, thank you, all.

We'll go to Mr. Morantz.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Thank you, all, for your presentations.

Mr. Moody, I want to circle back to some of the things you said in your original statement. I want to preface this by saying that this morning I had a Zoom call with some of our local chambers of commerce here in Winnipeg, and I have to say there's much confusion out there right now. The wording on the government's websites has changed on a number of eligibility requirements. The eligibility requirements for the wage subsidy are extremely confusing. Eligibility for the CEBA we talked about already today, and there's the question of the floor being too high and so many businesses being left out.

You talked about a clawback and I'm wondering if you could elaborate on how that could be structured. What can we do now to streamline this?

I also want to circle back to Mr. Kelly's comment that he thought it was almost too late for the wage subsidy.

On the GST, we have been asking now for weeks for the government to simply refund GST up to six, or now 12, months. It seems to be an elegant interim solution to the funding shortfalls that businesses are finding. I'm wondering if you could comment on that, and maybe even speculate as to why the government hasn't commented or taken any initiative on a refund of the GST.

There's a lot packed in there, but I'll let you run with it.

[Kim Moody]

I'll start with the first question, with respect to fast changes. I'll put that into what I call trying to find credible sources of information. I've been pretty vocal about this. There's no shortage of changes. Everybody's drinking from a firehose and the changes are coming pretty quickly.

We're dealing with stuff that is very complex. The average person simply cannot interpret tax legislation—that's usually reserved for tax lawyers and tax accountants who have years of experience. To try to put all the stuff into plain English, you're relying on press releases that are put out by the Department of Finance in many cases. The Department of Finance is doing its best, I certainly know that, but there are errors. As a matter of fact, yesterday there was an error that caused significant angst in the tax community and it was all because they missed the word “not” when they talked about the emergency wage subsidy. The Department of Finance quickly changed that.

This stuff is difficult, and finding credible sources of information is difficult. I would submit that the government's websites are great and should be relied upon rather than the media.

The second thing is legislation. We need the 75% wage legislation now. It's not good enough to rely on the Department of Finance press releases, which change quite rapidly.

As far as a GST refund is concerned, I mentioned that in my note. Technically, that's littered with a whole bunch of technical issues that geeks like me can identify rather quickly, but it's a good alternative. As I mentioned in my opening remarks, I think we need to get creative and put monies in the hands of business owners.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

There was a great deal of confusion, and people were concerned about whether they were going to have massive fines or potentially jail time. We need to find a way now to streamline these programs. I think the time to wait is over.

I have a different question for Mr. Moody, about looking forward to when we start climbing out of this horrible mess that we're all in together. What would your view be on a temporary exemption from the capital gains tax, particularly on the sale of publicly traded shares, as an economic stimulus to get the economy moving again, as opposed to a centrally controlled government stimulus program? Which do you think might be more effective?

[Kim Moody]

Well, it's creative. I like the thought. There's a lot of thought coming out from people right now. I saw one on allowing people to withdraw money from their RRSPs, for example, and pay it back over time without tax consequences.

I think any creative thought like that, and the one you suggested, should be on the table. It's pretty easy to cut ideas. It's a lot harder to come up with good ideas, so I commend you for thinking of that. Canada is going to need a lot of creative thought to get out of this horrible mess.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Fraser is next, and then we're back to Mr. Ste-Marie and Mr. Julian for one short question each.

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you, Mr. Chair.

I'll start off by addressing an item that Mr. Cumming led off with. He indicated that he felt we were sort of fast on announcements but slow on execution. I'll remind those listening that I think now is the time to be fighting the global pandemic rather than having political parties fight one another. I'll also remind him of the fairly expeditious rollout of the CERB, which has seen millions of Canadians apply in a matter of weeks. The emergency business account is available as of today, and I've spoken with business owners. Despite some real obstacles that have been raised on this call, today also happens to be the day when millions of Canadians will see their additional GST cheque a month ahead of schedule and will receive the Canada child benefit ahead of schedule, as well. With respect, despite some very real challenges on the wage subsidy to get businesses the liquidity they need expeditiously, I'll remind him that things have been moving at torrential speed to date.

One of the things that some of our witnesses mentioned that could serve as an obstacle to continuing the expeditious rollout of programming is the fact that we really do need legislation and we need it as quickly as possible. I'll direct this question to the Canadian Chamber of Commerce.

I assume it would be your view that any sort of political gamesmanship directed towards anything on this wage subsidy legislation, other than actually improving the quality or rollout of the wage subsidy, would be inappropriate at this stage. Would you agree with that statement?

[The Chair, Liberal, Wayne Easter]

Susanna, go ahead.

[Susanna Cluff-Clyburne]

What I will say is we think that parliamentarians need to get back together as quickly as possible, either in the format they adopted for the passage of the other legislation or another format, but it needs to be done now. We think that Parliament needs to be recalled as quickly as possible to pass the legislation to get this done.

We can't let the perfect be the enemy of the very good. I think that we are going to be dealing with this for a long time, and there will be necessary changes made to current programs as well as new programs introduced. All we ask is that parliamentarians get together and get it done.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much for that advice. I hope we're able to find a way to get it done within a matter of days, or less if at all possible.

Mr. Kelly, turning to some of the surveys you've done of your members, did you actually conduct a similar survey before some of these new measures were announced, to understand what the impact on the small and medium-sized business community across Canada would be if we didn't have, for example, a wage subsidy program or the emergency response benefit? Is that something you actually got information about, how your members viewed their fortune previous to these announcements being made?

[Daniel Kelly]

Yes, we've now done four surveys of our members. Each weekend we are going to our membership. We have 110,000 small and medium-sized companies as members. We have asked them about their views of what's happening on the COVID front, what the impacts are and also what their recommendations are to the government and other public policy-makers to help address the problem.

The number of businesses which, prior to that, said they were likely to fail—they thought they would be able to survive only a month—did drop once the wage subsidy was announced, because many of them saw that as a lifeline to help guide their business through this very difficult time. It was the number one measure that CFIB recommended right after the 10% pay was announced. We pushed and were pleased to see that rise to 75%. We're pleased to see the additional clarity that has been provided. It is not a perfect measure. It's not going to help every business owner, but it will still help thousands of business owners make it across the finish line, who I believe would otherwise have failed.

I do think we can do better. I would encourage governments to continue to be open, as they have been, to making further changes and adding supports in other areas, but the measures that have been taken by the government will certainly save many companies from outright failure.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much for that and, more important than your testimony today, for your feedback as some of these policies have developed. I really appreciate hearing directly from representatives of the small business community.

Mr. Kelly, in the interest of getting money in the hands of individuals quickly, it seems we're fairly far down the path of the current program design of the wage subsidy. I'm wondering if you have any view on this.

If we work closely with the banks, which will see essentially a promise by the federal government to pay 75% for eligible businesses, do you think there might be an opportunity to lean on our major financial institutions, and perhaps credit unions as well, to front that money if they know that it's backed by a federal government commitment to make good on the 75% wage subsidy? An eligible business owner could walk into the bank and essentially have access to money tomorrow that would be returned by the federal government through that business once the wage subsidy payments are flowing.

[Daniel Kelly]

I think to a certain extent that is already happening, where businesses are going to try to get some upfront loans. I have to tell you that the biggest help you could give businesses to ensure that they have the confidence to borrow money, either through the Canada emergency business account or on their own, or using shareholders' own resources such as the value of their home in order to pay that, is by removing the 30% criterion for small and medium-sized firms. If your government were to do that, at least for the very small guys, who don't have accounting procedures as sophisticated as those of some of the larger players, I think more and more businesses would have the confidence that they're going to get that money, eventually if not today, and they will be able to hold out.

I would invite the government and the opposition parties.... I agree with the statement that we don't want this wage subsidy legislation delayed. We need to get it across the finish line very soon to have the certainty for businesses to use it. If we could fix that eligibility criterion, that 30% rule, at least for the smaller or medium-sized guys, I think a whole bunch of the problems would melt away. I'd ask you and your government to consider just that.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much for that. I appreciate it.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll go to one question from Mr. Gabriel Ste-Marie, one from Mr. Julian and then Mr. Poilievre.

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

Thank you, Mr. Chair.

Mr. Milliard, you spoke of the importance of start-ups, the realities involved and the possible solutions to meet their needs.

Can you elaborate on this, please?

[Charles Milliard]

Thank you for your question.

I believe that we're now in a constructive mode where we're trying to perfect the model. I think that these measures must be adopted in a truly diligent manner, and we must all do our due diligence. However, we must acknowledge that some businesses are being left behind. I think that start-ups and research and development companies are included in this group simply because their investments are based on a promise of future profitability. These businesses have a hard time demonstrating a loss of revenue because most of them had no revenue in March 2019, for example, or even last January. Ironically, these businesses are the future of the Canadian economy and the Quebec economy. These businesses surely include the future Google or the future Canadian Apple. The current wage subsidy program, which is based on lost revenue, pushes these businesses aside somewhat.

At the federation, we proposed a type of loan to help these organizations pay wages. These loans could be converted into grants if the businesses do what they're supposed to do and the employees are still at work after a certain period. In this way, we would reach the last bastion of people who are somewhat excluded from the current measure.

I urge you to consider this proposal and to try to speed up its implementation, so that the money reaches the businesses as quickly as possible. The money must move from the parliamentary discussion stage to the reality of businesses across Canada.

Thank you.

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

Message received.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

Mr. Julian, you can ask one question and then Mr. Poilievre will start another five-minute round.

Peter.