Finance Committee on April 16th, 2020

[The Chair, Liberal, Wayne Easter]

Welcome to the second panel of the House of Commons Standing Committee on Finance, meeting number 19. As everybody knows, we're operating under an order of reference of Tuesday, March 24. The committee is meeting on the response of the Government of Canada to COVID-19.

Today, and especially with the minister and his officials here, we're considering a biweekly report that has been provided by the Minister of Finance on the actions undertaken pursuant to parts 3, 8 and 18 of the COVID-19 Emergency Response Act.

I know the minister's time is limited. We really appreciate it, Minister. In fact, I was trying to give you a break and not have you come to this meeting today, but thank you for finding the time later in the day to appear in person. I think you have about 45 minutes, and then we'll go to officials after that. We'll allow you to start with an opening statement and then we'll go to questions. The first one up on questions will be Mr. Poilievre.

Go ahead.

[Bill Morneau, Liberal, Minister of Finance]

Thanks very much, Mr. Chair.

I'd like to take the opportunity to thank the committee for having me here. I'd also like to thank the members of the Standing Committee on Finance for the work they're doing.

We obviously know that COVID-19 is causing unprecedented disruption to the economy here at home and around the world. None of us has faced a crisis like this. Our government knows that Canadian workers and businesses have been through a tough time already and that this difficult period is continuing. That's why we're moving rapidly to help as many Canadians as possible, as quickly as possible. We're creating, developing, adapting and delivering measures in record time.

Today my goal is to highlight some of the measures we've announced recently, including enhancements to programs in anticipation of your questions.

Earlier this month when I met with you, I talked about the Canada emergency response benefit, which provides $2,000 every four weeks for up to 16 weeks to workers who lose their income as a result of the pandemic. What we've seen over the last week is that millions of Canadians have successfully applied to the program and received payments. We want this benefit to be as flexible and accessible as possible. That's why, for example, it's available to workers whether or not they have employment insurance. No one should have to choose between protecting their health, putting food on the table, paying for their medication or caring for a family member.

Yesterday, the Prime Minister announced new measures to expand the eligibility criteria for the Canada emergency response benefit. Workers can earn up to $1,000 a month while receiving the benefit. This includes wages along with fees and royalties.

The Canada emergency response benefit will also be available to people who were unemployed prior to the pandemic, who ran out of employment insurance benefits, and who can't find work because of COVID-19. Seasonal workers who can't work in their field because of the pandemic will also be eligible.

The Canada emergency response benefit is an important part of the government's COVID-19 economic response plan to support Canadians and businesses facing hardship as a result of the COVID-19 global pandemic. We also need to recognize that the pandemic has placed a significant amount of stress on certain workers.

Take those working in hospitals or nursing homes as examples, or the people who are ensuring the integrity of our food supply and those providing essential retail services to Canadians. The work these people are doing is essential. However, their salaries are sometimes less than what they'd receive from the Canada emergency response benefit. We want to boost the salaries of these essential workers. We're working with provinces and territories to offer a cost-shared, temporary top-up to the salaries of all low-income workers deemed essential in the fight against COVID-19.

Through this new transfer, provinces and territories will be able to provide a salary top-up every four weeks to the essential worker who earns less than $2,500 per month. The Government of Canada will cover a portion of the cost of the top-up and will provide an important boost to the front-line workers in our hospitals and long-term care homes, those working to make sure our groceries are well stocked, and others.

As announced yesterday, the federal government will share the cost of the programs to retain essential workers that were already in place in Quebec and British Columbia. The government is also providing support to employers through its COVID-19 economic response plan.

As you know, the Canada emergency wage subsidy covers 75% of employees' wages up to a maximum benefit of $847 per week, for up to 12 weeks. As I said earlier, not all jobs are the same and not all businesses are the same. We changed the eligibility criteria for the Canada emergency wage subsidy to help as many employers as possible and thereby as many workers as possible. As a result of Bill C-14, which was passed by Parliament last Saturday, employers must show that their revenue decreased by 15% in March 2020, instead of by 30%, as will be the case for April and May. We also acknowledge that the pandemic has been negatively affecting employers since mid-March.

Employers will also have two possible benchmarks to determine their eligibility, based on their loss of revenue. They'll be able to compare revenues of March, April and May 2020 to that of the same months of 2019. Alternatively, they can use an average of revenues in January and February of this year; this is especially beneficial for new businesses and start-ups that might not have a year's worth of earnings to look back on.

Employers will calculate revenues through one of two accounting methods: either the accrual method or the cash method.

To make it simpler and more cost-effective for employers to re-employ workers, the government will also refund some premiums for employers who keep their employees on paid leave. This includes employment insurance, Canada pension plan, Quebec pension plan and Quebec parental insurance plan premiums.

The government continues to assess and respond to the challenge of COVID-19 and we stand ready to take additional actions as needed. Earlier today, the Prime Minister announced that we'll make the Canada emergency business account available to more small businesses.

The CEBA was created to provide help to small businesses and not-for-profits to pay for non-deferrable operating costs. When we initially launched CEBA, the eligibility requirements required employers to have paid between $50,000 and $1 million in total payroll in 2019 to qualify.

As we've always said, the COVID-19 economic response plan is responsive. We heard from Canada's small businesses. We want to make sure that businesses are getting the support they need, so we've expanded the criteria. CEBA will now be available to the businesses that paid between $20,000 and $1.5 million in total payroll in 2019.

In addition, the government is also providing up to $306.8 million on a cash basis to indigenous businesses unable to access the government's existing COVID-19 support measures. This includes access to short-term interest-free loans and non-repayable contributions. Financial support for indigenous businesses will be provided through aboriginal financial institutions that offer financing to first nations, Métis and Inuit businesses.

Canada's COVID-19 economic response plan is the biggest economic program of our lifetime.

We're prepared to do whatever it takes to keep Canadians safe. We'll support workers and businesses because we know that this will help the Canadian economy recover more quickly once the crisis is over. This is how we can continue to build an even better Canada.

Thank you. I'm happy to answer your questions.

Mr. Chair, I'm ready for questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

To the departmental officials, your staff and others, thank you for the biweekly report. There's a lot of information in it. With all the other stuff that is going on these days, I know it has to be difficult to pull that together.

We'll go to five-minute rounds with the minister. We'll start with Mr. Poilievre, and then we'll have Mr. Fragiskatos, Mr. Ste-Marie and Mr. Julian.

Pierre, you're on.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you, Minister.

How many medical face masks did your government throw away last year?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, I don't know if the technician can help, but Mr. Poilievre is actually sideways, so I'm looking at him vertically.

Unless you're actually lying down....

[Voices]

Oh, oh!

[Pierre Poilievre, Conservative, Carleton, ON]

It has been a very long month, Minister.

Is he sideways as well? I think we can get into the habit of looking at each other sideways.

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you for the question. I think importantly we are working hard to make sure we have the protective equipment that Canadians need.

[Pierre Poilievre, Conservative, Carleton, ON]

How many did you throw away last year?

[Bill Morneau, Liberal, Toronto Centre, ON]

Again, I'm sure that we can continue on other questions if you'd like. I don't have anything to respond in that regard, but I know that we're working hard to make sure we have the protective equipment that Canadians need.

[Pierre Poilievre, Conservative, Carleton, ON]

Okay. The answer is now made public. Your government tried to cover it up, but you threw away two million essential face masks last year and 440,000 medical gloves. That's in addition to the 16 tonnes of personal protective equipment you sent outside of the country, leaving many people scrambling.

I had a call from a member of Parliament today who is literally driving around to seniors homes and providing them with face masks. There are no other supplies, your stockpiles having been emptied. He was shocked to learn that HST applies on the purchase of essential medical and personal protective equipment. In addition to having driven up the price of this equipment by throwing it away and giving it away, your government is actually taxing this essential equipment.

On behalf of the official opposition, I'm prepared to call on you to lift the HST off personal protective equipment. Would you commit here and now that your government will stop taxing this vital equipment to make it more affordable for groups and facilities that desperately need that equipment at this time?

[Bill Morneau, Liberal, Toronto Centre, ON]

Well, as I think you know, we are in the midst of an extraordinarily challenging time in getting the proper personal protective equipment ready and available for Canadians. I know that my colleagues have been working hard on this front. We've secured many things that we recognize are both critical now and will remain critical.

We're going to keep doing that. We're going to keep making sure that we have access to the sort of equipment we need at this time and that we're prepared to deal with this crisis. As with any suggestions that come from parliamentarians, we do consider them in order to make sure that we're responding in a way that's appropriate.

[Pierre Poilievre, Conservative, Carleton, ON]

Minister, I do have another question for you.

A great Sparks Street businessman, Sam Elsaadi, was telling me that many of the small businesses on Sparks Street are not able to access the emergency business account because they don't have payroll.

Now, it's positive that you've lowered the payroll requirement down to $20,000, but many new businesses, often immigrant-owned businesses, bring in family members to run the business and do all the work, and they all decide not to take a wage so that they can put all their money into debt repayment and growth. They can't get the wage subsidy because they have no historic payroll to qualify, and they can't get access to the emergency business account.

Would you consider allowing another measurement to qualify other than payroll so that deserving businesses like the ones that Sam is talking to can have a chance to get that $40,000 and keep their businesses alive?

[Bill Morneau, Liberal, Toronto Centre, ON]

Let me start by saying that we're trying to make sure the programs we put in place are responsive to the challenges we're facing right now. That's why we've done multiple things that are helping in many ways.

Obviously, we've had many people, including many small business owners, who have decided to go on the Canada emergency response benefit. In the case of Sam, I suppose there would be many family members who might be able to actually go on that emergency response benefit. It could be multiplied many times over if they meet those criteria.

Additionally, as you know, we did change the criteria for the Canada emergency business account, and now there will be more than a million businesses that will be able to apply for that loan. What has happened so far—I have the most up-to-date numbers—is that we've now hit 220,000 businesses that have applied for it. That represents about $8.8 billion in financing that has been realized and, of course, 25% of that will be forgivable if they pay it back by the end of 2022.

We are constantly looking at making sure our measures are responsive. You've seen that today. I hope there are other measures that are supported for that business. We'll continue to look at that.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

I know that we're running out of time—

[The Chair, Liberal, Wayne Easter]

You are out of time, Pierre. You're quite a bit over. You'll be back on again afterwards.

[Pierre Poilievre, Conservative, Carleton, ON]

Okay. Thank you.

[The Chair, Liberal, Wayne Easter]

We'll be back to you in the next round.

We have Mr. Fragiskatos and then Mr. Ste-Marie.

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

Minister, thank you very much for the work so far.

I also have to say thank you very much for listening to members of Parliament. Where gaps have existed, they have been filled. I can speak for myself here, but I think colleagues would agree that the engagement has been very good on your part and on the part of your staff and the Department of Finance. Today's changes were especially welcome, and I did want to mention that to you.

Minister, this is obviously not just a Canadian problem; it is an international problem, one that necessitates an international solution. With that in mind, I want to ask you how we are approaching that. Are we approaching it through particular forums? Is the G7 going to become quite critical in that regard? Is the G20? How do you envision that playing out?

In that vein, what are key issues of focus for you from the financial side when you're coordinating and interacting with your counterparts at the international level?

[Bill Morneau, Liberal, Toronto Centre, ON]

Thanks, Peter. It is most certainly a challenge that's facing not just Canada but countries around the world.

We have been very deeply engaged with other countries. We're trying our best not only to be coordinating as best we can but also to understand measures that other countries are taking to determine whether those might be helpful in our country. I was in a meeting with the G7 countries earlier this week and with the G20 countries yesterday, and with the International Monetary Fund committee this morning. We are in very regular contact.

The focus in those meetings is on comparing what we're doing and also on thinking about how we deal with the international financial system to make sure it's operating effectively, and then it's also to think about what we can do for countries that may be more impoverished and have significant challenges. We've been looking at how we can deal with the least well-to-do countries through the Paris Club and the G20. We've put forward important measures to actually be supportive of the International Monetary Fund so that they can deal with the many responses they're getting.

Also, on specific issues, we're actually trying to learn from each other. I was back and forth today with the Australian finance minister, Josh Frydenberg, and looking at our program versus what he's been doing in helping tenants with rent. As you know, we've talked about our need to deal with that as well, which we're working on. That's helpful, because we're looking at different ideas.

There are multiple ways that we're working on, together with the international community, and that will continue. Of course, every country has a different situation. We're in a positive situation in Canada comparatively but still have very significant challenges.

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

If I can shift from the international to the domestic, we've introduced a number of measures, but as you yourself have said, this is a phased approach and we will look at gaps where they exist.

I want to ask you about seniors. I've had a number of seniors reach out—constituents who I know personally, in fact—who are very worried about their retirement security. Seeing what's been happening on the markets, it's pretty obvious why. Do you have thoughts on that and what we would consider potentially looking at in the future to help seniors who are really wondering about their future stability in their retirement years?

[Bill Morneau, Liberal, Toronto Centre, ON]

I think seniors are probably the most anxious Canadians right now, because of the health issues around COVID-19 and the reality that it is hitting seniors disproportionately hard. I do know that we need to be very focused on our health systems to make sure they are supported, which we've been doing. To make sure that we work together with the provinces in the securing of the kind of equipment we need is also critically important.

From a financial standpoint, most of our efforts financially have been in trying to bridge people through this difficult time. That means in particular thinking about people in businesses that are having a fundamental change in their revenue as a result of COVID-19. From the seniors standpoint, the guaranteed income supplement and old age security of course are secure, so there's been no change in that. Also, when we introduced the GST low-income tax credit top-up, that had a very significant impact on seniors. More than 80% of single seniors and more than 40% of seniors in couples were advantaged through that measure, so that's quite helpful.

To the extent of their investment accounts, we have seen a huge amount of volatility in the investment accounts, as you know. From lows, that has come back up. Nonetheless, we know there's anxiety. The decision to reduce by 25% the amount of the RRIF that people need to take out is important, consistent with what was done in 2008-09.

We'll have to consider challenges as they come, Peter. We're going to keep doing that. We recognize that we need to support seniors, as they're very anxious around health, and we'll continue to do that.

[The Chair, Liberal, Wayne Easter]

We will have to end it there, folks.

We'll go to Mr. Ste-Marie, Mr. Julian and then back to Mr. Poilievre.

Gabriel.

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

Thank you, Mr. Chair.

Good evening, Minister Morneau. Thank you for being here. I also want to acknowledge the entire team of officials at this meeting of the Standing Committee on Finance.

I'm very pleased with today's announcement regarding commercial rental assistance. I'm also very pleased with the expanded eligibility criteria for guaranteed loans. There used to be a requirement to have a payroll of between $50,000 and $1 million. Now, the payroll must be between $20,000 and $1.5 million. This will make a big difference. We're very pleased about this.

At this time, the application form that people must fill out to obtain the emergency assistance contains an oddity. I'll read it:

14. Per the requirements of the Program, as set out by the Government of Canada, the Borrower confirms that: ... (c) It is not an entity owned by individual(s) holding political office; ...

I'm wondering about elected municipal officials. For example, I'm thinking of a reeve who owns a microbrewery in Lac-Saint-Jean, a municipal councillor who runs a store in the Laurentians, or a school board trustee who owns a restaurant in Bas-Saint-Laurent. More and more people are worried about losing their businesses. At this time, some financial institutions don't know the scope of this exclusion. They've been waiting for clarification from your department for the past two days. In the meantime, the applications are being put on hold.

Are you able to answer my question? If not, could Mr. Halverson answer it?

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you for your comments.

Obviously, there are still things that we need to consider. The purpose of this exclusion is clear. A person like you and me shouldn't have access to a loan for a small business. That's why we implemented the exclusion. We know that we need to look at the issue of part-time politicians. For example, we must establish the point of this situation. We're in the process of determining our approach. I don't have any news right now, but I fully understand the issue.

We still want to make sure that the loan goes to the people who really need it. This means that we still need to have criteria. We consider the criteria necessary to ensure that this works.