Finance Committee on April 16th, 2020

[The Chair, Liberal, Wayne Easter]

Andrew, do you have it?

[Andrew Marsland]

I don't have it, but my sense is that it's somewhere around $320 billion. Don't quote me on that.

[Sean Fraser, Liberal, Central Nova, NS]

Okay. If you're within a rounding error of even double digits here, I think it will illustrate the point.

I think what we're talking about is a program that could certainly more than double the total expenditures of the Government of Canada when you look at everything we've spent money on, every program or project or income support, if we move forward with the path. It doesn't seem to be the most elegantly targeted model. As the minister pointed out, there are a number of people on this call whose income has not been interrupted and don't necessarily need it. The point could be made that some of that income could be clawed back.

One of the things I have a sincere fear about is setting taxpayers up for a real surprise come tax time. Even if you wanted to pull this back from individuals—let's say the median income is somewhere around $40,000 for an individual in Canada—I'd have real concerns about requiring people, even if it's only the 16-week period...from having to be surprised with a requirement that they pay back $8,000 come tax time.

I'm curious to know if, when we were developing the CERB, there was thought given to a basic income and how this particular kind of policy may be superior in terms of value for money.

[The Chair, Liberal, Wayne Easter]

Mr. Marsland I believe we'll go to you. If others want to step in, raise your hand.

[Andrew Marsland]

Others may be better positioned to respond to that. After all, I'm the tax guy. However, let me raise some considerations around that.

The idea of the universal basic income has been around for a long time and there have been debates around it and one or two small pilot studies. I think the issue is really around balancing the replacement of the supports in place now through provincial efforts, through the employment insurance system and so on, with a system that replaces all of those. The questions one might have are around affordability, labour market effects and so on. We didn't get into those discussions in designing the Canada emergency response benefit. Really the question there was how to support Canadians in as fast a way as possible, in a simple way, in the way that was responsive to the extraordinary situation at hand.

[Sean Fraser, Liberal, Central Nova, NS]

Can I just dig in on that speed issue for a moment, Mr. Marsland?

One of the things that might be a common misconception is this. I've been to the finance department's offices a number of times and I've never seen a “send money now” button, and I worry that we don't necessarily have a database that gives us access to make direct deposits into Canadians' accounts, or necessarily a home address that we could send a cheque to. Given the statement you just made, is it your view that the CERB, from a time saving point of view, is the quickest delivery method to get available money into the hands of people, save and except for the pre-existing mechanisms like the GST rebate or child Canada benefit enhancements?

[Andrew Marsland]

In fact, Mr. Vermaeten might be in a better position to speak to this, but essentially we used the benefits system at the CRA, together with Service Canada's system. We used those systems that were already in place to, effectively, on the basis of attestation, on the basis of information that was already on file, such as direct deposit and so on, to deliver it as quickly as possible. If there is a faster system, I can't imagine what it is.

[The Chair, Liberal, Wayne Easter]

Okay. Unless Mr. Vermaeten has something to add, we will move on to Mr. Cumming and then Mr. McLeod.

I might point out, Jonathan Wallace, you have a nice cat that jumps across your desk there every once in awhile.

Go ahead Mr. Cumming.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you to the witnesses for appearing. No cats on my desk here.

I know how busy all of your are and I'm going to save the Department of Employment and Social Development some work. You do not need to study employment patterns right now. Businesses are closed, people are looking for income and you're flooded with applications. The issue is let's get people back to work.

I want to focus my questions on CEBA and the Department of Finance. Do have any statistics on how many applications have been rejected and what they've been rejected for?

[The Chair, Liberal, Wayne Easter]

Go ahead, Soren.

[Soren Halverson]

Thank you.

We have some preliminary information from the financial institutions. I just want to put in parentheses here that this program was launched last Thursday. We are now at day five, I suppose, in terms of the program window being open.

We've had conversations with the financial institutions about what they're seeing in this regard. We've heard that the percentage of those getting rejected is not very high overall. If I were going to put a number to it, it would be somewhat below 10%. In part I think it reflects the simplicity of the selection criteria.

Why are they getting rejected? About half of them are getting rejected because of fraud. There may be a flag against a party who is seeking an application, which causes it to be rejected. Others may not have met other parameters that are part of the application.

It is an area where we are going to drill in and make sure we understand it as best we can.

[James Cumming, Conservative, Edmonton Centre, AB]

Given that the parameters have now changed, which I think is a good move because some applicants had been rejected based on the fact they didn't fit under the old parameters, will you be going back to those applicants? What will be the process for that?

[Soren Halverson]

Again, this is a program that's run through the financial institutions at the front end. From our conversations with those institutions today, I think what we're hearing is that they will communicate broadly to their business clients, so there will be no shortage of information, including outreach from the banks and other financial institutions, that this is available so that those who perhaps had taken a first look at it and found themselves not eligible will be able to go in and reapply.

[James Cumming, Conservative, Edmonton Centre, AB]

Another issue I've heard about from thousands of business relates to sources of income. T4 income is a problem for some smaller operations that are taking dividend income. I've heard from chiropractors who are independent contractors. A variety of things count as employment income in today's modern world.

Is there any reason why the department wouldn't look at either independent contractors or dividend income earners under both the CEBA program and wage subsidy program?

[Soren Halverson]

I'm going to make a couple of comments. They're maybe not going to answer your question directly, but they will give you a bit of context.

First, the purpose of the CEBA program is to meet non-deferrable costs that a small business might have. It fits into a scheme of other programs the government has available, including the other credit programs offered by BDC and EDC. It also includes the CERB, which would be available, for example, to a sole proprietor, so it's part of the broader framework of programs.

When it comes to this specific program, we were looking for criteria that could be adjudicated rapidly. As Andrew suggested with regard to other programs that have been put up, we needed very simple criteria that could allow the program to be deployed quickly, to be scaled very, very rapidly, and that would provide an indication of the physical platform a business has. The operative idea here is to get at those businesses that are actually going to have costs. It's a place where those costs aren't otherwise met through other forms of support the government has.

[The Chair, Liberal, Wayne Easter]

Did you get enough clarity on that, James?

[James Cumming, Conservative, Edmonton Centre, AB]

I just want to go back to this. How difficult would it be to recognize dividend income as employment income on a temporary basis, because this is what we're really talking about? There are thousands of small businesses that don't operate on the basis of T4s.

[Soren Halverson]

What I would say in response is that it would add complexity to the process, when simplicity, really, was one of the primary factors that allowed us to move quickly. It would cause us to have to introduce other tests procedurally.

Right now, we are what we are, having opened a program that is making credit available to something in excess of a million small businesses in Canada because we were able to do things in a simple and streamlined way.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there. Thank you both.

Turning to you, Michael McLeod, and then to Mr. Poilievre.

Mr. McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

I want to say, first of all, that the north was very glad to see the package of support announced earlier this week, specifically the health, transportation and business supports. I've heard quite a bit of feedback from the chambers of commerce and the chambers of mines in my riding, as well as the northern senators, who had expressed some concerns about the flexibility of some of the programs, like the wage subsidy.

First, could somebody could talk about the response to assist the territories and a little about further steps to address our unique needs?

Second, the Government of the Northwest Territories has been waiting quite a while now for a response to its request for an increased borrowing limit. That limit is set by the federal government. It's kind of time. The Government of the Northwest Territories plans to do a number of initiatives.

I'm just wondering if somebody could respond to those two issues.

[The Chair, Liberal, Wayne Easter]

I would expect it would be Mr. Marsland, but I'm not sure.

Can anybody go to that one?

[Suzy McDonald]

Yes.

[The Chair, Liberal, Wayne Easter]

Go ahead, Suzy.

[Suzy McDonald]

On the issue of territorial borrowing limits, thank you for raising this. We certainly understand the situation of the north and the specific needs there. There have been—I think I may have mentioned this last time—a number of conversations around borrowing limits. We continue to look at the issue.

With regard to recent support for the north, indeed, we announced $72.6 million for the Governments of Yukon, Northwest Territories and Nunavut. That's just for health and social services. Certainly in response to the current crisis, we looked at providing an additional $17.3 million to territorial governments on northern carriers. My colleague Evelyn might have more she'd like to add on that.

Also, $15 million of existing resources were made available through the Canadian Northern Economic Development Agency, CanNor, to provide non-repayable support to businesses in the territories to help address the impacts of COVID-19, again, understanding the particular needs of the north and what could happen there.

Then, of course, there is $25 million for Nutrition North Canada to increase subsidies to families, so that families can afford nutritious food and personal hygiene products. We also expanded that program so that it included a wider range of things that could be covered, including personal hygiene but also cleaning products, to make those more affordable to people in the north.

Of course, as you know, through the territorial funding formula, the north receives a fair amount of money from the federal government on a regular basis, and that money goes toward a wide range of needs.

I don't know if you wanted additional information on those announcements.

[The Chair, Liberal, Wayne Easter]

Michael, do you have another question?