Finance Committee on April 9th, 2020

[Yves-Thomas Dorval]

Yes. I have something to add.

Several aspects still haven't been considered. My colleague just listed a number of them. I spoke a little about them earlier when discussing the measures coming to an end, such as grants, other programs or the deferral of tax payments, taxes and so on. Regarding all these aspects, the governments are currently telling us that the recovery will be long and gradual. Some businesses will be able to restart, but a significant proportion of them won't be able to do so. I'm thinking in particular of businesses and enterprises whose business model includes gatherings of people in small spaces, such as restaurants, tourism businesses and events. All these organizations will suffer negative effects for much longer.

Other businesses can keep generating revenue because they can keep running, in particular through telework or with an order book. However, that order book will quickly empty, and the impact on revenue will come later. There's also the increase in costs.

Some aspects still haven't been considered, and these aspects will cause problems for businesses. Once again, I'm asking parliamentarians to work together to pass the bill quickly so that some provisions can be set in motion as soon as possible, even if it means making improvements later on.

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

Noted. Thank you.

[The Chair, Liberal, Wayne Easter]

We will have to end that round there. We are substantially over time.

Mr. Julian, you're up next. Then we'll go to Mr. Cumming in the next round.

Mr. Julian.

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

Thanks, Mr. Chair.

Thanks to all our witnesses. This is important testimony, and all of us hope that your families are safe and healthy. I appreciate all of the testimony.

I'll start with Mr. Kelly. I have four questions.

First, we know from the Minister of Finance that they are already working on putting in place the wage subsidy, so the issue of when the legislation passes is immaterial as they are already putting in place the steps. The finance minister also reports that it could be as long as six weeks before money is made available. That must be a concern in terms of how quickly the government responds to the crisis and how quickly businesses are able to access money.

The second question actually comes from somebody you know well, Gord Johns, the MP for Courtenay—Alberni. He is our small business critic. He raised the issue that a constituent, Shelly Lee Fader, who owns Jiggers Fish & Chips in Ucluelet, applied for the loan she needed for her business, but because of the payroll requirement, she fell $483 short of the minimum payroll requirement, so it has been rejected by the system.

My second question is really around the regulations. Do they not need to be much more flexible, both in terms of loans and also in terms of the wage subsidy and that 30% threshold? You can imagine the number of businesses that will be $483 short on actually attaining that 30% threshold and what that will mean for their businesses.

My final question is around rent abatement. Denmark, Australia and France have put in place programs of rent abatement for businesses. Gord Johns and I have written to the finance minister asking, as part of that shared measure, that the federal government put forward a program to reimburse a portion of rent abatement for small businesses. That would help property owners, of course, give more flexibility to the business owners who rent from them. Do you think that a rent abatement program, as what other countries have done, would be important for the small business sector?

[The Chair, Liberal, Wayne Easter]

Mr. Kelly.

[Daniel Kelly]

Thank you very much for the questions.

The time to receive the wage subsidy is of very significant concern. I will point you to slide nine of my slide deck. For those who are saying they would not be helped by the wage subsidy, the primary reason is that it is already too late, because it took some time to get the program in place. The second-largest reason is that it will be too late for them from this point forward before the money is in their hands, as they just don't have the cash flow to be able to survive.

When asked about that, the government has pointed business owners to the CEBA, the Canada emergency business account, as a way of bridging that gap. I think for many it will help. I will point out that the program just opened up today, and we are already hearing concerns from business owners about some of the process steps in that. I see that in real time on Twitter.

The payroll requirement is the number one concern we have about that. There should be no floor. Micro-sized businesses should absolutely be allowed to apply to set up those accounts. I think that's absolutely critical, as well. The million-dollar upward threshold needs to be raised significantly in order to allow medium-sized firms to access it, too.

On the flexibility of all these programs, I think Susanna from the chamber got it exactly right. Having a cliff at which you actually get some money at the 75% level or get zero if you're below that 30% is unfair. There should be a graduated level of support if the impact on your firm perhaps is less.

On your final question, on rent abatement, we are very much supportive of measures to reduce costs. Small firms right now just don't need deferrals of some of their expenses. They need some of these costs to be taken away.

The NDP in Ontario have put forward a proposal that sounds quite similar to what you're suggesting, using the 75% figure from the wage subsidy. They're saying that on the first $10,000 in rent, the commercial renter should have 75% forgiven by the provincial government. That could just as easily be done by the federal government. However, the feds and the provinces, I think, especially where businesses have been ordered to shut down, do need to step up to the table.

[The Chair, Liberal, Wayne Easter]

Peter, you have time for a quick question.

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

The NDP, including Gord Johns and I, and the Bloc Québécois asked the government to provide a subsidy for the fixed costs of small businesses. We're looking at about $10,000.

Could this subsidy be significant for small and medium-sized businesses in survival mode?

[Charles Milliard]

I'm sorry. I missed the first part of your comment, but I understood your question.

I believe that this type of support can be beneficial to SMEs. Our request isn't very complicated. We want the most direct measures possible.

As I said in my presentation, we obviously don't want to disparage loan guarantees and loans. However, small and medium-sized businesses are having real issues with cash flow. These businesses are under so much pressure that, as this time, they need any direct assistance to pay bills or wages.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll go to the second round, which is a five-minute round. We'll hold people to five minutes.

We'll start with Mr. Cumming, and then Mr. Fragiskatos, Mr. Morantz and Mr. Fraser.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, witnesses, for taking time out of your busy schedules to appear today.

I've heard some pretty consistent themes that there's been speed on announcement but slowness on execution. For the small business people I'm talking to, not a dime has hit their accounts yet, other than some deferrals, which is very concerning.

Mr. Kelly, what would you think of the idea that we floated of having GST remittances over the past year rebated to small businesses so they could at least get some level of cash flow into their accounts in the short term? I'll ask Ms. Cluff-Clyburne the same thing as well.

[Daniel Kelly]

What I like about that proposal is that it actually puts dollars in the pockets of business owners that they do not have to repay. That is the kind of support the small firms really need right now. It's similar in some ways to the $10,000 forgivable portion of the new Canada emergency business account. I give credit to the government for making that part possible, but we believe that should be an upfront grant to the business, just like your proposal to refund the GST/HST money to the business that has collected it. It is an uneven amount, though, because there are some businesses that do not have to collect the GST or HST on certain products. The idea of some base-level support to all very small businesses to deal with some of their fixed costs, in addition to your helpful idea, I think [Technical difficulty—Editor].

[The Chair, Liberal, Wayne Easter]

Susanna.

[Susanna Cluff-Clyburne]

I would totally agree with what Dan said. The government has already started on that path with eligible employers, under the emergency wage subsidy, being able to receive back their CPP and other federal payable deductions.

I would also like to put forward another concept. This just shows how desperate some small business people are, and it is in the realm of a taxation issue. We're hearing from some members who want to be able to use their RSP savings to save their businesses, but want to be able to do so without taking the withholding and income tax hit as a result of doing so, on the understanding that they would put the funds back into the RSP once things improved again.

[James Cumming, Conservative, Edmonton Centre, AB]

Great, thank you for that.

It just tells you how desperate it is and how these businesses absolutely need something now.

I want to turn to Mr. Moody.

Mr. Moody, from your brief, it seems there's a lot of complexity to the system and no money is flowing. It should be relatively easy to administer source deduction offsets on this wage subsidy. Could you comment on that? It strikes me that it would be a fairly elegant solution to keep that cash flow in the hands of the small businesses.

[Kim Moody]

Thank you, Mr. Cumming. I do agree with that. It was in my opening remarks.

I actually like quite a lot what the government did on the 10% wage subsidy. That is exactly how cash was put in the hands of small business owners. I think there's something there with respect to the 75% as well. I do agree that we should look at that as an option.

[James Cumming, Conservative, Edmonton Centre, AB]

Are there any suggestions you might have around fixed costs, particularly around rent? Is there anything you can think of from a tax position that could be creative, that would be some form of abatement or some form of tax credit?

[Kim Moody]

That's a great question. I spent many, many hours thinking about how a lot of our clients are certainly in that position. I don't have any brilliance on that, unfortunately, but I'll continue thinking about it. Sorry about that.

[James Cumming, Conservative, Edmonton Centre, AB]

Wayne, do I have any more time?

[The Chair, Liberal, Wayne Easter]

You're pretty nearly out, but finish your question.

[James Cumming, Conservative, Edmonton Centre, AB]

I'll go back to Susanna on this whole idea that, for all the small businesses I've talked to, rent is a significant issue. Other than the potential credit on the loan, the $10,000 if you pay it back within two years, do you have any other suggestions on how we could administer something that would give them some relief?

[Susanna Cluff-Clyburne]

We are hearing a lot about putting money directly in the hands of landlords themselves. I think we heard a suggestion from one of the other panellists today on that. It could be a shared federal, provincial and territorial responsibility. A lot of SMEs we're talking to would feel much more comfortable if that were a process that would be examined and executed.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We're turning to Mr. Fragiskatos, and then to Mr. Morantz.

Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Mr. Chair.

This question is directed to the chamber and to the CFIB.

We have seen banks respond in some meaningful ways to the crisis, but do other organizations have thoughts on what else banks could do right now to assist businesses, in particular small businesses? I've spoken to many constituents, owners of small businesses, long-standing owners, successful owners, people who have been in business for 10, 20, 30 years but have been turned away by banks.

I'm just wondering if the chamber and CFIB could shed some light on that question. What else could banks do right now to assist small business owners?

[The Chair, Liberal, Wayne Easter]

We'll start with the chamber, but first, we are getting background noise again, so people should check to make sure the mute button is on.

Go ahead, Susanna.