Evidence of meeting #21 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A recording is available from Parliament.
5:35 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you for that. Just as my own thoughts on that, René, I used to be a hog producer, and I don't even know whether $20 per hog would cover the current need, but that's my opinion.
Mr. Julian.
5:35 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you, Mr. Chair.
I have two quick questions. The first is for Mr. Roy.
Mr. Roy, you said you needed $20 per hog, but how much is that industry-wide? The pork industry is extremely important. How much will it need to get through the crisis?
My other question is for Mr. Lachaîne. You talked about the importance of universality. I actually asked Mr. Kelly a question about that earlier. How important is it to adopt the principle of universality, as other countries have, when it comes to wage subsidies and emergency benefits?
5:35 p.m.
First Vice-Chair, Canadian Pork Council
As far as support for the pork industry goes, the chair of the committee suggested that $20 per hog may not even be enough. As business owners, we are prepared to assume some of the risk. We are well aware that prices fluctuate.
According to our estimates, $20 per hog could help us get through the crisis in the next few weeks. We're not asking the government for a full support program. We just need help to get through the crisis.
We are producing about 27 million hogs per year, so that will give you the range of numbers. We hope that this help will be enough and that the market will pick up. That's the idea.
For how long? We believe, according to the futures markets, that the next six months will be really tough. That's what the futures contracts are saying, but we hope that we will get through this period. What we see are some business risk management programs that should be upgraded. That's work that is already on the table for the government. Hopefully, it will sort out some of these problems in the long term.
April 23rd, 2020 / 5:40 p.m.
President of the Board, Canadian Pork Council
Mr. Chair, if I may...?
5:40 p.m.
President of the Board, Canadian Pork Council
I appreciate it.
Mr. Chair and others, just to finish the thoughts that René presented to you, we know that's actually a very low number. Today, for example, Tyson Foods in the U.S. closed its third American plant because of COVID. Right now in Canada, we know that we've had a flavour of some plant closures, and those were devastating in that region in Quebec and in Ontario and the Maritimes.
We are on the cusp, so although we make this request, our sector changes by the day and sometimes multiple times a day. If we have the misfortune of plants closing, as the people in the U.S. do, then we have bigger problems, and, to go to your point, $20 is nothing.
On Annie's question in regard to the things that are being done on the pork side as well, right now there are some super procedures that are in place and are being put in place. We've had the fortune of seeing others around the world with their misfortune, and that has prepared us.
We're fortunate and blessed to be in that position, but our guards are not down at the processing plants, and our guards are not down on our farms. We understand biosecurity on our farms, so COVID is not a scenario that's lost on farms or at the processor level in terms of all the due diligence that is required. As was mentioned earlier on, we are an essential service for Canadians, and food security is also very critical.
Thank you.
5:40 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you.
The next lineup will be Mr. Fraser, who is coming back in, and then Mr. Poilievre and Ms. May.
Just to put this in perspective for committee members, that one Tyson plant in the U.S. kills 10,000 hogs a day. I believe it's one of those that shut down. That will put into perspective how serious a plant shutdown is.
Sean Fraser, go ahead.
5:40 p.m.
Liberal
Sean Fraser Liberal Central Nova, NS
Thank you very much, Mr. Chair. I appreciate it. I did want to go back to Mr. Kelly, who now has rejoined us, with translation.
Thank you very much for being with us.
First, you mentioned during one of your last responses that it might not be your usual reputation at the CFIB to be advocating for this kind of immense public spending to combat an emergency. I'm curious as to when the time will come when you live up to your pre-existing reputation.
You see, the challenge right now is a bit easier in some ways, I find, because everyone, more or less, is suffering from a particular common threat, with some obvious exceptions. There's going to come a time if these emergency temporary benefits remain in place for too long where the benefits may actually have a market-distorting effect, where we will be rewarding people who do not rebuild their businesses successfully and creating a competitive disadvantage for business owners who, for example, no longer see a 30% drop in revenue.
When are we going to know when it's the time to rip the band-aid off, so to speak, and to know that the emergency is over and we should let the market, rather than government supports, dictate which businesses succeed?
5:40 p.m.
President and Chief Executive Officer, Canadian Federation of Independent Business
It's an excellent question and I absolutely 100% agree with its premise that the reasons.... Subsidies for business are a bad thing. They create all sorts of terrible incentives and we should do as little subsidization as possible.
This is, of course, very different. The government has imposed a shutdown for good and valid reasons, a needed shutdown on swaths of the business community. As we begin to lift those restrictions, that will begin to be the time when we can start to take away some of the measures.
However, there are businesses that are not going to see the effects of the problem in the immediate phase. For example, the tourism industry right now is in a fairly slow season, but we worry that while Canada is coming back up and running—let's hope, over the summer—if tourism hasn't bounced back by then, the impact on that sector will be huge. If it misses those bookings during those valuable summer months, it will not then be able to rely on its income in the rest of the year.
It's going to be an art far more than a science and we're going to have to plan as we go, but it is absolutely critical that there are some significant subsidies in place right now that really do freeze businesses and protect them so that we can then take those supports off at the earliest opportunity.
I know that in years to come in the finance committee, you'll be pointing at this testimony when I'm complaining about higher taxes, so please do keep it, Chair, on record; but we're going to have to deal with that when it comes. Right now we have business owners who are absolutely not sure where to turn. The supports are needed right now, and we will work with you to find opportunities to take them off, but I think you're absolutely right that we should be thinking about that carefully.
5:45 p.m.
Liberal
The Chair Liberal Wayne Easter
Okay, thank you both. I'm not sure if Pierre is online or not. I don't see him. We might go to Mr. Cumming—
5:45 p.m.
Liberal
The Chair Liberal Wayne Easter
Okay, there you are. Go ahead, one quick question and then we'll go to Elizabeth May and end up with Julie.
Pierre.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Actually, Wayne, if I could get my five minutes, that would be great. I had only one question last time.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Mr. Lachaîne, I think you made some excellent comments. You very carefully explained the downside of constrictive and restrictive government corporate welfare programs.
I agree with you that the government would have been far better off having a simple liquidity program that would put cash in the hands of businesses by reimbursing some of their remittances and then allowing them to direct it to whatever they thought most necessary. Trying to create a separate, highly prescriptive government program for every item in a business's budget is not working. They have one for wage subsidies, they're going to try to come up with one for rent, and they've tried to come up with a very small loan program.
I think they would have been far better off just reimbursing businesses with a large amount of liquidity that businesses could use, depending on their own particular circumstance, as is happening in other countries around the world. That has been delivered very effectively. I want to thank you for your testimony in that regard.
I also want to ask you about the post-COVID period. We can't subsidize every industry into success. We'd have to take more money out of the economy than we have to pay for. What do you think we can do post-COVID to unleash economic production so we can afford the quality of life that Canadians have come to expect?
5:45 p.m.
Chief Technical Officer, Sentiom Inc.
Thank you.
You first mentioned the problems, the delay and the inefficiency, in deploying capital in programs. This is why I said that universality is required, and also, to not change market conditions right now for the future. Just for us, if we were to have the wage subsidy, it would be $100,000. It's very important.
On the uncertainty that it creates in the market as we go along, we're only four weeks in, and as it goes along it's creating more uncertainty in the market, because we don't know what other programs are going to come in. There is uncertainty for investors investing even in new technologies, because they don't know if competitors in the future are going to get some subsidies and not them.
That's a very important point, that universality, and also, you know, maybe raising taxes specifically for this year retroactively at the end of the year for people who received it and shouldn't have. They haven't created value, and what we want is to create growth and value.
On the second part of your question on what we can do post-COVID, I believe that we should plan something universal that would decrease the wage subsidies as we go through the months. We need to give people time to pivot. In the start-up world, pivoting means that you're testing something. When it doesn't work, you change either the market or something in the product, and you adapt.
As a country, we now need to decide if we accept this as the new reality, that this is the worst-case scenario, and we adapt. We can pivot the whole economy into a low-touch economy. If it's going to stay for two years, it's going to be in our habits afterwards. People are going to work from home more. This is going to change the economy, so we can't continue doing what we do.
I believe that one of the key points for putting more people into entrepreneurship and having more people start and grow businesses and get value would be to have a universal basic income. It takes two years to get a start-up up to speed. During those two years, you have your private capital, so this is—
5:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
How much would that cost? Do you know how much that would cost? Everyone keeps talking about it. Nobody can say what it would cost. What would it cost and how much would we have to raise taxes to pay for it? Because it has to cost something, and it has to add up somehow.
5:50 p.m.
Chief Technical Officer, Sentiom Inc.
For Canada's child benefit program, there are already some studies on it. For every dollar that is sent in, it creates four dollars in value in the economy. I say this because GDP is the economic mass times the velocity of money. When you give money at the low end, at the low end of the spectrum, you're putting it into the velocity of money, so it actually increases—
5:50 p.m.
Chief Technical Officer, Sentiom Inc.
—your multiplier, and it just goes into consumption. This is how we create a lot more value. It's not from penalizing everyone from getting work and starting businesses and—
5:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
You have to get the costs of that. You can't simply propose it and say that it will magically pay for itself. Everything costs money, and nobody who has talked about this idea has come up with a costing.