Finance Committee on April 9th, 2020

[The Chair, Liberal, Wayne Easter]

Welcome to meeting number 18 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of Tuesday, March 24, the committee is meeting to discuss the government's response to the COVID-19 pandemic.

Today's meeting is taking place exclusively by teleconference, and the audio feed of our proceedings is made available via the House of Commons website.

For the best sound and the best procedure, when we go to questions, please wait until I recognize you by name. Unmute your phone, and then go to your questions. Try to specify who your question is for. It makes it a little easier when we're on a teleconference such as this.

I should explain to members, who will have seen that the notice of meeting has changed, that the first panel is for two hours with five witnesses. Because the Canadian Bankers Association could stay for only an hour, I split the second two-hour panel into two one-hour panels so that we could do the appropriate questioning of the Canadian Bankers Association and the credit unions. Then the second hour-long panel will follow that which is on your list. That's what happened in that regard.

With that, if witnesses could hold as tightly as they could to five minutes in their remarks, that would be helpful.

Welcome to all of the witnesses. We'll start with the Canadian Chamber of Commerce and Susanna Cluff-Clyburne, senior director, parliamentary affairs.

Susanna, the floor is yours.

[Susanna Cluff-Clyburne, Senior Director, Parliamentary Affairs, Canadian Chamber of Commerce]

Thank you, Mr. Chair.

As you know, my name is Susanna Cluff-Clyburne and I hold the small and medium business file at the Canadian Chamber of Commerce. I'll be sharing my time this afternoon with my colleague, Leah Nord, who is the director of workforce strategies and inclusive growth at the chamber.

Thank you for the opportunity to speak with you today regarding the impact of the COVID-19 pandemic on small and medium businesses and the government's response to it.

Today’s March employment data from Statistics Canada lays out a sobering picture of just how badly Canadians and the businesses that employ them are being hit by this crisis. With small and medium businesses providing nearly 90% of all private sector employment in Canada, we know they are being hit the hardest. However, we didn’t need today’s data to tell us that. All of us are hearing from SMEs every day about how this crisis is, or will be, affecting them if they don’t get help.

We are impressed at the rapid response of the federal government to the COVID-19 crisis. We are also heartened by the co-operation of parliamentarians from all parties on getting done what needs to be done to get income assistance to Canadians and tools to businesses to help them get through and out of this crisis in the best possible shape.

Income support programs for individuals appear to be working well. The Canada emergency response benefit proves what government can do. It is a testament to the will of the government and the hard work of public servants to get desperately needed help to Canadians.

Not surprisingly, at the Canadian Chamber of Commerce what we hear most about, though, are programs targeted to businesses. Of those, the emergency wage subsidy has caused the most confusion and concern. We’re relieved that the government has listened to the concerns businesses had first with the level of the subsidy and more recently with the eligibility criteria.

Yesterday, we learned of welcome changes to the program that would see many more businesses able to benefit from it. We are particularly relieved that the government clarified that not-for-profit organizations and registered charities are eligible employers for the subsidy and announced flexibility for them in reporting their revenues. This will help organizations like chambers of commerce and many others to keep serving those who rely upon them.

However, there remain some hurdles to be cleared before employers and employees can begin to benefit from the subsidy. The first is recalling Parliament as soon as possible to pass the required legislation. The second is getting the assistance to eligible employers. This needs to be done in a matter of days, not weeks. In weeks many businesses simply won’t be there. There is also the harsh reality that if your business has been ordered to close to prevent the spread of COVID-19 and you are employing nobody as a result, this subsidy will not save your business or your employees’ jobs.

Programs introduced to provide access to more capital for entrepreneurs involve them accumulating more debt when their businesses are failing through no fault of their own. Some of those that are in a position to take on more debt, for example, through the Canada emergency business account, are finding themselves unable to qualify for reasons that quite simply don’t make sense.

One small business in Alberta that employs far fewer than the 100 employee definition of a medium-sized business has a payroll that exceeds the $1 million limit by $13,000, so it cannot qualify. It's laying off staff and cutting back on its operations rather than hiring additional staff for its busy season as it had hoped. If an incentive to make it as easy as possible for businesses to qualify for support programs and to get that help to them while they’re still around to use it ever existed, today’s employment data is surely it.

We ask that Parliament rapidly reconvene and approve the Canada emergency wage subsidy and we urge the government to get those urgently needed funds moving to businesses now.

I'll now turn it over to Leah.

[Leah Nord, Director, Workforce Strategies and Inclusive Growth, Canadian Chamber of Commerce]

Thank you.

I'd like to join my colleague Susanna in thanking the committee for inviting the chamber to speak this afternoon on SMEs. I would like to add that one of the most important aspects of the response to the crisis, and what will likely be one of its greatest legacies, is the Team Canada approach that has been taken: all governments, all parties, all businesses, all labour, all Canadians. As Susanna said, and to state the seemingly obvious, the statistics on the workforce numbers are stark, and we have to look no further than this morning's labour force survey data for March of 2020. Since March 15, there have been more than five million applications for federal income supports and, to be honest, I'm just going to skip over the rest of the bullets here on the data.

We are still in the midst of the crisis and will be for the foreseeable future. We still don't know yet for how long, but we are beginning to see the light at the end of the tunnel. Without disrespect to our Canadian chamber members who are still in the thick of the crisis, I would like to say a few words about the transition and recovery, particularly as they relate to SMEs. We do know that the workforce will be different after this crisis. At this point, any other projections are conjecture. What we do know is that SMEs are the economic engines of this country. Pre-crisis, 98% of the businesses in this country were SMEs and they were responsible for the majority of the employment and employment growth across the country.

How we are going to get out of this crisis, through the transition and into recovery, is simple. We need solutions by small business for small business, by communities for communities, and these solutions need to be driven by local and real-time data, including labour market information. The Canadian chamber's network consists of 450 local chambers and boards of trade across this country. They serve as hubs for over 200,000 SMEs. They can provide space, facilitated time and standard tools through which a workforce planning initiative, developed by our colleagues at the U.S. Chamber of Commerce Foundation, could be utilized. This program, known as the talent pipeline management initiative, can provide a way forward, a way through. To borrow wording from the recently launched Canadian Business Resilience Network, we can move from persevering to again prospering.

Through the question period today, I hope to be able to provide some more information about this initiative and what it can do for Canadian business and the economy as a whole.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Leah and Susanna.

Next, from the Canadian Federation of Independent Business, we have Dan Kelly.

Go ahead, Dan.

[Daniel Kelly, President and Chief Executive Officer, Canadian Federation of Independent Business]

As I'm sure everyone knows, these have been incredibly difficult times for small and medium-sized firms across the country. I've spent 26 years working with and for small businesses and have never seen anything like this. This challenge started with small and medium-sized firms. With these economic circumstances and challenges, unlike previous recessions or economic turmoil which typically starts with large companies and trickles down to smaller companies, it has been the reverse, starting with main street and moving its way up to Bay Street.

We at CFIB have been absolutely flooded with calls from small business owners. Many of them are almost paralyzed as to what they should do next. We typically receive about 50 calls per day from small business owners and that's now up to 800. Just last week alone, we had five small business owners talking to us about suicide. That is how dark this has quickly become for so many small business owners who, of course, we all know have an incredible responsibility on their shoulders to help not only their families who rely on the business for their source of income, but also the families of their employees. I can't underscore enough just how dark and dangerous these days are for so many small business owners.

I provided the committee with a deck and slide 3 of that deck shows some brand new data that we've collected at CFIB. We've now done four surveys, one each weekend, of the impact this is having on small firms. One thing I think the committee should know is that only about 20% of Canadian small and medium-sized firms remain open; 80% of small companies are either fully closed or largely closed as a result of trying to do their part to slow the curve. Much of that, of course, has been ordered by government.

Cash flow is a major concern for small businesses, and their long-term business finances are also worries. On slide 5 we share that 30% of businesses right now do not have the cash flow necessary to pay even their April bills, let alone the bills that are going to be coming forward in the months ahead.

I will say that there have been a variety of helpful programs that have been established. I do wish that these programs had started earlier. We have been, of course, pushing and pleading for some further support. The largest concern for small business owners right now, the number one cost, is wages and we've lost some ground. Many layoffs have happened as a result of the fact that there haven't been programs in place to support wages at a much earlier stage. That 10% subsidy that was implemented a few weeks ago is a helpful measure, no doubt, but it took us some time to get to the 75% figure, and even more time to get the details right. We still don't have the program out there.

I say that knowing that there are tons of civil servants and political leaders who have been working tirelessly to try to put these measures together and are doing two years of work in two days or two weeks. However, a lot of this is now too late for businesses, and the prospect of their rolling back some of the layoffs is limited.

We asked our members about the Canadian emergency wage subsidy. This was done this past weekend before the additional details that were rolled out just a day or two ago. About 30% of small businesses said this CEWS would help them, but 36% of our members said no, they would not be helped by it. Others were unsure.

How will the Canadian emergency wage subsidy help small businesses? The largest group said that it would help them retain staff who are still on their payroll. That was 44%. A third of our members said that it would help them retain all of the staff who are on their payroll. Fewer said that they would be able to recall staff as a result.

In terms of the roadblocks, though, to those businesses that are not going to be helped by the emergency wage subsidy, the largest group said it was just too late. They've already done their layoffs and now reversing everything would be too complicated even if they did qualify. The next largest group, 30%, said they just can't afford to wait up to six weeks to get the money. Another 21% said they worry that it would be too difficult to demonstrate the 30% test. Many of them have seen revenues drop much more than that, but the 30% test has been quite a blunt one for many firms and they're just not sure that they're going to have the evidence to provide the CRA to make sure that they qualify. Then still others know that they're not going to qualify because their sales drop has been less than 30%.

We're pleased to see other measures being put in place, such as emergency business accounts, but all of these programs have major design challenges. We're trying in real time to iron some of them out. In the case of the Canadian emergency business account, unfortunately the threshold of $50,000 to $1 million does cut out a large number of microsized businesses, as well as some that have a million dollars in payroll, such as large restaurants. We're urging government to expand and change some of these programs to allow more businesses to access them.

Our preferred option, of course, with the Canada emergency wage subsidy, is eliminating the 30% test altogether, particularly for small and medium-sized firms, and making it more akin to the British program that allows you to enter without additional paperwork or evidence to be demonstrated.

I'll cut my comments there. I have a lot of data on all of the major programs. We're grateful to the government for the steps that have been taken to date and grateful to the opposition parties for suggesting helpful amendments, and we're willing to work side by side with all parties to improve these programs to support some of the businesses that are hanging on by their fingernails.

Thanks so much.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Kelly.

We will turn now to the Fédération des chambres de commerce du Québec and Mr. Milliard.

[Charles Milliard, Chief Executive Officer, Fédération des chambres de commerce du Québec]

Good afternoon to all members of the Standing Committee on Finance. Thank you for the opportunity to speak to you today in the context of the health crisis brought on by COVID-19. My name is Charles Milliard and I am the chief executive officer of the Fédération des chambres de commerce du Québec. With me is Alexandre Gagnon, director of the labour and occupational health and safety unit.

I remind you that the Fédération is both an association of chambers of commerce and a provincial chamber of commerce. Thanks to our vast network of close to 130 chambers of commerce and 1,100 corporate members, the Fédération represents more than 50,000 businesses operating in all sectors of the economy and in all parts of Quebec.

As you know, the current crisis is unprecedented in our modern times, and its economic and social repercussions will inevitably be damaging for a long, long time. The effects on our economy are obviously being felt immediately. To mitigate these effects, a swift response by the government was needed to find support measures to assist both Canadians and businesses, while keeping within the operational capacity of Canada's public service so that the measures can be put in place as quickly as possible.

However, let's say respectfully that the devil is often in the details, as the saying goes. Sometimes, quick adjustments are required, which the government has done in the past few days. I would therefore like to commend the government and parliamentarians for listening to employers' concerns in Canada and, more specifically, in Quebec.

The changes announced yesterday to the wage subsidy are obviously welcome and they address many of the concerns of employers. Allow me, however, to suggest a few areas for improvement for your consideration.

For some businesses, particularly those in the professional services sector, the full effects of the crisis will be felt several months after reopening, due to the billing and service agreements they have. But the support measures will no longer be in effect. We therefore encourage you to extend the three-month eligibility period for the wage subsidy so that they can apply the measure at the time that is most critical for them.

For some employers, the loss of revenue criterion is also difficult to apply. For start-ups, the crisis will have a greater impact in terms of arrested growth and deferred revenue expectations, making it difficult for venture capital providers to finance them. Players like those will have to look to the future rather than to the past to observe the impact of this crisis.

Offering a loan convertible into a grant on the condition that no layoffs are made and that all employees are retained until three months after the crisis could therefore be an interesting alternative that would keep innovative businesses on track.

We also applaud the government's willingness to reimburse employers for their contributions to employment insurance, public pension plans and, for Quebec employers, the Quebec parental insurance plan. This will reassure employers about the cost of their labour and make it possible to avoid many layoffs...

[The Chair, Liberal, Wayne Easter]

Charles, could I interrupt you for a minute? The interpreter can't keep up with your speed. You'll get a speeding ticket if you're not careful, so just slow down a little.

[Charles Milliard]

All right, I will.

We also applaud the government's willingness to reimburse employers for their contributions to employment insurance, public pension plans and, for Quebec employers, the Quebec parental insurance plan. This will reassure employers about the cost of their labour and make it possible to avoid many layoffs and to look forward to a quicker economic recovery. Beyond the promise of support, the money will obviously need to get to employers as quickly as possible.

Loans made possible by the BDC and the EDC partially meet our members' needs. For an SME, having a substantial additional loan is sometimes not an option. It only delays the impact of the crisis on businesses. Flattening the economic impact curve is necessary, but it will still have an impact in the long term, and it also means a more sluggish economic recovery.

Uncertainty and fear at the prospect of repaying a large additional debt could force many employers to make very tough decisions rapidly. For many businesses providing essential services, the crisis does not involve declining revenue, but an explosion of costs caused by more difficult procurement, heightened security procedures and, in some sectors, the obligation to provide additional compensation, comparable to the amount paid by the Canada emergency response benefit, in order to motivate employees.

The government has repeatedly said that it is considering converting some loans to direct assistance. We encourage you to communicate the criteria for doing so quickly, if it is the case, and to include financial institutions in the overall development process, where they are involved.

Many of the measures announced will help us get through the crisis, but we need to start thinking about reopening. Increased and accelerated investment in certain sectors could help get Canada back on track. We encourage you to consider awarding more government contracts as soon as possible, particularly in the areas of information technology, research, technological innovation and transportation infrastructure. A crisis is also a way to think differently and to innovate in order to increase Canada's productivity and facilitate its entry into the fourth industrial revolution.

In conclusion, strong and rapid economic recovery will require business networks capable of informing and supporting our businesses. Chambers of commerce across Canada are being hit hard financially by the current crisis, while businesses are demanding them more than ever.

Unfortunately, we cannot expect Canadian employers to be able to support chambers of commerce as they did before. With this in mind, we encourage you to think with us about how to support these key networks of NPOs dedicated to economic development, but also to operationalizing the decisions you make as parliamentarians.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Milliard.

Turning now to Moodys Gartner Tax Law, Mr. Kim Moody.

The floor is yours, Kim.

[Kim Moody, Chief Executive Officer and Director, Canadian Tax Advisory, Moodys Gartner Tax Law LLP]

Good afternoon, committee members. Thank you for the opportunity to discuss the government's response to the COVID-19 pandemic, and specifically as it relates to small and medium-sized businesses.

My name is Kim Moody. I'm the CEO of Moodys Tax. I have a long history of serving the Canadian tax profession in a variety of leadership positions. Our firm's clients are private businesses, and I can certainly confirm Mr. Kelly's earlier observations about how dire the situation is for businesses. It's real.

Again I want to commend the government for its tireless efforts to respond to the challenges for which there are no rule books. I am also appreciative of seeing how the government is willing to change course or update its original positions as it learns and the situation evolves. However, this is a moment in our country's history that demands—and I think it actually requires—all of us to put our interests aside to work together to help those Canadians who are suffering. The issues facing Canada are too difficult for a small group to have all the answers. Accordingly, our government doors need to be wide open for involvement by any persons or bodies that can constructively provide timely and effective alternatives or imperfect solutions to the many challenges.

With that in mind, the two key objectives I believe the government should be looking to achieve are, first, to increase the speed of delivery of the assistance and, second, to make it simple and fix the imperfections later.

To help as many Canadian businesses and Canadian individuals as possible, my suggestion for these objectives can be summarized in one sentence: If any Canadian needs access to the CERB or if any Canadian business needs access to the wage subsidy, send them the cash and create metrics that would result in a clawback of up to 100%, similar to what we have already with the old age security program and the Canada child benefit.

Let's discuss the CERB first.

It's great news that Canadians who need the fund can already apply and get access to it, so government did a great job with the speed of the program. Here is a small suggestion, though: Don't restrict who can apply. We just need a clawback.

If you use a clawback measure, such as the CPP limit or an individual's 2019 employment income, even if people at high income levels get access to the CERB, they will have to pay it back fully as part of their 2020 income tax filing. The worst-case scenario is that the government has provided an interest-free loan. The only thing the government needs to do is to determine the metrics for the clawback and then add that to the legislation. With this in place, every Canadian could get access to funds and the government would have a full backstop to prevent abuse.

I will now turn to the wage subsidies.

A wage subsidy is a great idea and is needed by small businesses. However, even if the government had months to develop this policy, it would be nearly impossible to prevent the wage subsidy from going to businesses that don't actually need it but will nonetheless qualify, and vice versa. Designing a subsidy that doesn't inadvertently shut out deserving employers would also be very challenging. If a business declares a need for the wage subsidy, I believe we should provide that subsidy and then look to claw back up to 100% of the wage subsidy based on certain metrics.

However, the subsidy should come with conditions. For instance, businesses should agree to cap salaries of all employees, especially the shareholders. We wouldn't want businesses getting the wage subsidy to pay the CEO or the owners, for example, a $1-million salary. That's just not right. Also, an attestation should be obtained from businesses that employees would have to be laid off without the wage subsidy.

I also don't think the wage subsidy is needed—

[The Chair, Liberal, Wayne Easter]

I'll just stop you for a minute. Somebody has a mike not muted. We're getting a lot of background noise. Could everybody please check their mute buttons?

Okay, Kim, go ahead.

[Kim Moody]

Thank you.

I also don't think the wage subsidy is needed for every employee across all sectors. If an organization only requires support for a few employees, just support what is needed, not the entire organization.

Those are what I think are my imperfect solutions.

Turning now to the proposed 75% wage subsidy, unfortunately draft legislation is still not available to the public and I would encourage its release ASAP. It is critical. I am not sure why it's being restricted to such a small group of people and media.

Based on the releases by the Department of Finance to date, there are significant problems with these proposals. Unfortunately, given my time limitations the problems are too numerous to list today, but interested readers or listeners can look to our firm's blog on the topic. In my written notes I've provided a hyperlink to that blog.

The long list of issues that we discussed in the blog can be put into two very general camps. The first camp is the speed of the delivery of the needed financial assistance. Three to six weeks is simply way too long. However, I appreciate the predicament the government is likely in. I loosely understand that the government's ability to deliver funding cannot easily be accelerated given the constraints with technology, and there is likely not enough time to come to an effective agreement with our Canadian banks to help accelerate the delivery of such funds.

The speed lever is likely not one that can be easily pulled, but creative out-of-the-box thinking can help here. For example, allow reductions against the payroll income tax remittances like the 10% wage subsidy provides for, or immediately refund previously remitted payroll and/or GST-HST remittances for a limited period. These can all likely assist in speeding up delivery of funds.

The second camp is the complexity camp for the 75% wage subsidy program. The revenue decline test, with various amendments announced yesterday by the Department of Finance, is far too complex with more questions than answers for the average business owner to figure out on their own. For example, such a revenue decline test does not deal with many businesses that are start-ups, such as technology companies, which may not have any revenue but have many employees. These companies operate with the expectations that they'll have revenue later in their business cycle, but they will not meet the revenue decline test as currently outlined.

The revenue decline test, without a doubt, will require professional help for many to ensure that their attestations are correct to confirm their eligibility and to avoid the harsh penalties if they get it wrong.

There is plenty of opportunity to pull the reduced complexity lever, in my opinion. Of course, pulling that lever will result in imperfect solutions and some leakage, but I ask you, what is worse: one, putting immediate financial assistance in the hands of desperate small business owners with a system that is a little rough around the edges in terms of eligibility and delivery, but cuts a wide swath; or two, crafting a more perfect system that will deliver funds to people who perhaps need it more than others and that can reduce the incidence of bad actors, but comes with tremendous complexity?

In these very challenging times I choose the simple, but less perfect solution. There will be plenty of time for perfect or better solutions later. Implementing a complex system like the proposed 75% wage subsidy will prohibit the success of what I believe should be the intention of government, which is to provide financial assistance to business owners who need it now.

Canadian small business owners, who are obviously the lifeblood of our country's economy, need financial help now. Like most Canadians, small business owners are worried and scared, and in some cases their lifelong efforts, which required blood, sweat and tears to build, are in danger of disappearing along with their employees' ability to earn a living. If they were provided with real and simple assistance to get them through this difficult time, they would be in a much better position to ensure that their lives would remain intact, along with their employees, and they would be in a much better position to get themselves and our country ready for the economic recovery that will inevitably occur.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Kim.

We go to our last witness on this panel, from the Quebec Employers' Council, Yves-Thomas Dorval.

Yves-Thomas, go ahead.

[Yves-Thomas Dorval, President and Chief Executive Officer, Quebec Employers' Council]

Hi, and thank you very much for inviting me to share our point of view on this issue. I will deliver my remarks in French, but just before I do, I just want to highlight the fact that the Conseil du patronat du Québec, the Quebec Employers' Council, represents more than 70,000 employers who have activities in Quebec. It can be a Canadian business with activities in Quebec or Quebec-owned companies and so forth.

We represent all sizes of our employers' organizations, all types. These can be public, private, or can be non-profit organizations and co-operatives, and so forth, in all regions and in all sectors.

Our organization is first a regroupement of our trade association sectors, associations of employers in different fields. Of course, we also have large corporations as members, but for the purpose of our discussion today I will focus more on the SMEs.

Thank you.

The world is currently facing a health crisis that none of us have had to get through before. There are no historical references behind us to help us better define how to proceed. The challenges presented by this situation are many. Over and above health and humanitarian considerations, this is obviously also an unprecedented economic crisis for the interests we represent.

I will not repeat the suggestions my colleagues made just before me, since we agree with most, if not all of them, particularly those put forward by my colleague Charles Milliard of the FCCQ.

All businesses are affected in one way or another by the current situation. Whether they operate in essential or non-essential services, all businesses are affected. Some sectors are feeling it more than others. This is the case, for example, for everything related to tourism, events, travel, passenger transportation in general, restaurants—in short, all organizations where customers or employees come together in a limited space and do not provide essential services. Essential services can be included, since in their case, we're talking about organizational problems, issues with access to human resources and, above all, the costs of providing their products and services, which have increased enormously. This is also one aspect that the subsidy and assistance program does not address.

We can add, particularly in Quebec, the closure of construction sites. Tens of thousands of small businesses operating in this sector are obviously facing a total work shutdown.

The agri-food sector is fragile; it is affected by such things as the availability of workers and the issue of seasonal foreign workers who can come to help with planting and later with harvesting. Among the impacts on small and medium-sized enterprises, there are specific challenges. First of all, there is a great upheaval at all levels, and their survival is threatened in a number of cases. According to our information, if the shutdown is further extended in Quebec, 25% to 40% of small businesses will probably not be able to survive. There are issues of liquidity, and sudden and sharp drops in revenue in many cases, particularly because of closures in sectors considered non-essential. There are the problems of having to lay off employees. For those that are still operating, the issues are the loss of revenue, the new measures to protect their employees' and customers' health, the need to reorganize work, the absenteeism of affected employees, the management of telework where possible, the accelerated digital transformation, and sometimes the loss of major customers such as large corporations.

We forget, but according to one study, in Quebec, a large company buys an average of $728 million from 3,000 small and medium-sized businesses. That is huge. It's a whole ecosystem in which the activities of SMEs are sometimes directly linked to those of a large corporation and the disruption of supply chains.

We must not forget the concerns of entrepreneurs, their personal anxiety, their health, and that of their families and employees.

Governments have taken action and implemented measures, adjusting them as needed. The Conseil du patronat du Québec, or CPQ, appreciates what the government, all public servants and all partners are doing. A number of measures for businesses have been put in place by governments, particularly the federal government: loans and loan guarantees, deferred tax payments, deferred regulatory requirements and, of course, the emergency wage subsidy, which the business community requested and greatly appreciates.

The eligibility criteria for the subsidy have been expanded, for non-profit organizations among others, and we thank you for that. While further amendments are required, I implore parliamentarians to pass the bill as quickly as possible. Of course, it would be appropriate to make changes to improve it, particularly with respect to businesses that are not affected by reduced revenue but by increased costs. However, these improvements must not slow down or stop the passage of the bill.

Our second recommendation is to take steps to ensure that registration and eligibility for the program and the release of money from it can be done as quickly as possible. Six weeks is far too long. Too many businesses will not make it through the “Valley of Death”.

It will also be necessary to explore the possibility of introducing assistance programs specific to the sectors where the effects will be long-lasting. I am referring specifically to those who work in areas that require customers or employees to be in limited spaces, to those who cannot meet the physical distancing or protection standards. We should not underestimate the value chain of the ecosystems in which small businesses operate.

Reopening will also need to be a concern, particularly in terms of the effects on businesses both large and small. As my colleagues have said, the decline in revenue for some companies will not necessarily occur in the short term or in the immediate future. The decline in revenue could occur later, when they receive payments or in subsidiary activities. Consideration should therefore be given to extending the duration of assistance programs.

Once again, we are very concerned about reopening and we have several suggestions on this subject. Rather than listing all those measures, I prefer to give parliamentarians the opportunity to ask us questions, which I will be pleased to answer.

Thanks very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Yves.

We will turn to questions from members now. We do have time to go with a six-minute round for the first panel, and five minutes after that, and I think we can get everybody on. My list is this, which I hope we're all on the same wavelength about: Mr. Cooper first with the Conservatives; Mr. Fraser with the Liberals; Mr. Ste-Marie of the Bloc; and then Mr. Julian of the NDP.

Mr. Cooper, you're on. Go ahead, Michael.

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

Thank you, Mr. Chair.

I'll direct my questions to Mr. Kelly, as well as the witnesses from the Canadian Chamber of Commerce.

One of the issues with the wage subsidy is that the claim period overlaps the reference period. In other words, the claim period that is coming up begins in mid-April and ends in mid-May, and what that would require is businesses to keep employees on their payroll for April without fully knowing whether they in fact would qualify for a wage subsidy as a result of a 30% decline in their revenues. Do you share this concern?

[Daniel Kelly]

Yes, I do think that does hold some concern, but I don't think that's the only uncertainty with the program. What we're hearing from so many businesses is their fear of the uncertainty around the 30% test and whether they're going to meet it. For some, it's whether or not their sales are actually going to decline by 30%, because they're not quite sure.

We certainly appreciate the government's fix to lower that threshold to 15% for March, which will help a lot of businesses, and we're grateful to Minister Morneau and his team for making that happen. However, for other businesses, the issue is the documentation that would be required. For a lot of businesses, even knowing precisely how far their actual booked revenue is going to decline is not the easiest calculation to make.

The CRA is not known for being particularly lenient, and I totally get that, because there are attestations and government is taking some risks so it needs to remind taxpayers about the possibility of cheating and the consequences of that. However, its repetition of that over and over again has led to a fear factor among businesses that if you don't have the paperwork to be able to demonstrate your gross revenue loss at that particular moment or afterwards, or if you've made a mistake, you're going to be facing jail time or massive penalties. It is now at the point where a lot of business owners who would likely qualify are worried about even applying, because they're not sure how they're going to be able to demonstrate this. The more rules and paperwork we put in place to do this, the fewer businesses that really do need the support will be able to actually keep their employees whole and hang onto them while this is going on.

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

Thank you.

Ms. Susanna Cluff-Clyburne from the Canadian Chamber of Commerce.

[Susanna Cluff-Clyburne]

I concur with what Dan said.

We're starting to get questions now from some small businesses because of the gap between the original 10% and the 75% being such a leap, and asking if the government would consider sort of a mid-ground subsidy for companies that can only demonstrate a 20% or 25% loss in revenue. I concur that the 30% is certainly causing a lot of angst, and there is some concern that companies are probably facing more harm if they can't demonstrate it than from just not applying at all.

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

Mr. Kelly, you said you would support abolishing the 30% threshold altogether. What metric would you support in place of that, if any?

[Daniel Kelly]

I think a preferred metric ideally is not to have that 30% test. When I looked there were 20 EU countries with similar wage subsidies in both amount and structure to Canada's. It's a mix of those that have a sales or gross revenue decline and those that have kept it really clean and have zero additional requirements that way. The British program is an 80% wage subsidy for all employers regardless of their size and circumstances. That to me is the cleanest way of doing it. Larger firms with more sophisticated access to tax and accounting advice may be able to manage that fairly well. I might suggest that you look at a threshold for smaller companies, perhaps with a couple of hundred employees or fewer, that could become exempted from the 30% test. That is one way this could be accomplished to ensure there isn't a risk or fear on the part of business owners from using it.

Remember, there are some firms that have major sales declines, but for many it's a very uneven way of understanding the impact this is having. There are tons of businesses that won't have a problem with the 30% test because their sales have fallen below the floor because they have zero sales, but for many it's going to be very imprecise and risky to go ahead and end up not meeting those challenges. Not only are you facing the penalties from government, but you are facing the potential bankruptcy of your firm, because if you have gone ahead and been paying your employees full wages and you don't get the subsidy, your business is done.

[The Chair, Liberal, Wayne Easter]

Thank you.

Go ahead, Mike.

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

How much time do I have?

[The Chair, Liberal, Wayne Easter]

You have less than a minute, but go ahead and ask a quick question.