Finance Committee on April 23rd, 2020

[The Clerk]

Mr. Chair, I hate to intervene here, but for you and members to know—I don't know if you've noticed—we're not providing interpretation services right now for Mr. Kelly. There's been a lot of distortion in the room when Mr. Kelly is speaking. I just want to put that out there so everyone knows.

[The Chair, Liberal, Wayne Easter]

Okay. We'll just go with a quick answer there, Dan, and then we'll have to move on anyway.

[Daniel Kelly]

I've just killed my video signal, hoping that the audio will improve.

Look, there's a lot more that banks can do. We have suggested, for example, with respect to lines of credit, that we would like banks to simply expand lines of credit that they already have. It's difficult for businesses to switch banks right now, but if they can use their existing banks and get more access to some credit where possible, that would be very helpful.

Credit card fees remain a problem for many small merchants. Any relief on that front would be welcome news as well. The NDP has put forward a variety of practical approaches, including on the wage subsidy, and we've been happy to join with them in sharing and pushing for some of the solutions that have been suggested.

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

Thank you, Mr. Kelly, and—

[The Chair, Liberal, Wayne Easter]

Thank you, Dan and Peter. We are out of time—

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

No, we're not, Mr. Chair. I still have a minute.

[The Chair, Liberal, Wayne Easter]

Not according to my clock. Go with one quick question, then.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

I think you were slow starting your button.

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

No, I wasn't.

On the issue of universality—you've mentioned it, Mr. Kelly—other countries have put in place universal programs and universal wage subsidies.

Mr. Lachaîne also brought up the universality of the Canada emergency response benefit.

We have an emergency response benefit that is already set up and is universal in nature. The federal government just has to take off the penalties at the back end.

How important is universality in the approach to these programs, Mr. Kelly and Mr. Lachaîne?

[Daniel Kelly]

I'll keep my answer very short.

I get the desire on the part of the government to make sure that the benefit of these programs, which are incredibly costly, goes to those who are most in need. The challenge with designing that in these emergency days is that we end up delaying the programs, making them less usable for many of the participants. As a result, we end up having more people join the unemployment lines than would otherwise be necessary.

I do think that in these circumstances universality is pretty critical.

[The Chair, Liberal, Wayne Easter]

Thanks to all of you for that.

The next round is a five-minute round, starting with Mr. Cumming and then going on to Ms. Dzerowicz.

James, go ahead.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, Chair, and thank you to all the witnesses today.

I want to direct my questions to Mr. Kelly. Hopefully, his technology will work.

Mr. Kelly, to start with, I want to talk a little about CEBA and its accessibility for people who are taking dividends. Those smaller businesses that don't necessarily pay themselves, other than through dividends, may use a personal chequing account to fund their businesses. Can you give me a quick thought on why those wouldn't be included? It strikes me that they should be included in this program.

[Daniel Kelly]

The government has had a problem with dividends since they've taken office, and I think we saw that in the 2017 tax hike.

I hate to say it, but we have to include businesses that have dividends. I've said to government on several occasions that we can resume the debate immediately after the crisis as to whether dividends are a good or a bad thing for small business, but let's include dividends right now, given that so many mom-and-pop shops pay themselves with dividends. Let's make sure that they are not excluded from the program. Right now, because they don't have formal salaries, we have the smallest of small businesses and family businesses excluded from many of the relief programs, most notably the CEBA loans.

We really do need to make sure that new firms that didn't have a payroll in 2019 are included, and that those that pay with dividends, those that have contract workers and the self-employed can gain access. The CEBA loans are helpful for those very small companies. It's a $10,000 grant. I have to admit that I had some hesitations about it in the early days, but I think the government has designed a good, appropriate tool for very small businesses. Unfortunately, it has excluded many very small businesses, and that should be changed. We've proposed solutions so that dividends that are paid just to the family members up to, say, the maximum insurable earnings for EI, could be used to satisfy the payroll test. We're pushing for that right now.

[James Cumming, Conservative, Edmonton Centre, AB]

Okay—

[The Chair, Liberal, Wayne Easter]

Just to interrupt for a second, James, the translation isn't coming through on my end in French.

Clerk, is it coming through on your end or are we just not getting on the translation on Mr. Kelly?

[The Clerk]

We're not getting the translation because there were too many distortions, so that's bit risky. I don't know if you want to continue with Mr. Kelly or if you want us to try to set up a test or invite him later, but it won't be possible for the interpreters to interpret.

[The Chair, Liberal, Wayne Easter]

Okay. That's a problem.

People, when you're asking your questions, keep that in mind, because we really should be doing it in a bilingual nature. I'm sorry to say that, as I don't want to avoid Mr. Kelly, but....

Okay, James.

[James Cumming, Conservative, Edmonton Centre, AB]

Unfortunately, I'm not going to avoid Mr. Kelly.

To go back to CEBA again, now that it's been open for a bit, Dan, are you collecting any data on why people have been rejected and what the level has been? Are you getting any kind of intelligence on what your members are telling you regarding the program?

[Daniel Kelly]

Yes, we are. We have data showing that about 60% of our members were qualified for CEBA with the original rules. It went up to about 70% to 75% of our members when the government expanded the payroll from $20,000 to $1.5 million, but there still remain about a quarter of small businesses that are excluded from the program, and probably even more if you include all of the self-employed in that mix.

One of the other tests that is causing problems, which I think you mentioned a second ago, is that you need to have a business bank account, not a personal bank account. Some very small businesses run the business essentially through their personal finances, and that has excluded some of them.

[The Chair, Liberal, Wayne Easter]

You can have a quick one, James.

[James Cumming, Conservative, Edmonton Centre, AB]

On rent abatement, there has been a phenomenal amount of money put in to create liquidity. My concern with the rent side is that one size fits all. Have you done any costing? It strikes me that it will be an incredibly expensive program. Hopefully, your members have already been negotiating with their landlords and the landlords have been negotiating with banks, because, of course, landlords cannot afford not to have these businesses as tenants.

Do you have any thoughts on that, Dan, short of rebate programs funded by the government?

[Daniel Kelly]

Yes. We are encouraging all of our members to try to negotiate with their landlords, and many have. Unfortunately, what that's doing, though, is just deferring bills. Very few have offered any actual reductions in their bills. I do worry that if all we're doing is deferring a lot of these expenses for Canadians or Canadian small business owners, when the economy begins to reopen and all of those bills start to come due, that's when the businesses will go bankrupt.

I get that these are expensive things to do, and I worry as a taxpayer about how long we're going to have to be paying for this, but it's very unfair for businesses to be asked to pick up the cost of the social distancing. They've basically had their businesses expropriated, and they're no longer able to earn an income. I do think it is appropriate for the state, for government in this case, to step in and pick up and relieve some of those bills. It is off brand for us at CFIB to make those kinds of recommendations, but there they are.

[The Chair, Liberal, Wayne Easter]

We'll have to leave that there.

Look, if we can't get translation working, I know I'm in violation of the rules when we don't have translation, so we'll either have to get translation working or bring Mr. Kelly back again if there are other questions for him. We have to be able to have interpretation or somebody will be writing the Speaker about what I did at the finance committee. I'd like to avoid that, if at all possible.

We will turn, then, to Ms. Dzerowicz and then Mr. Cooper.

Julie, go ahead.

[Technical difficulty—Editor]

[The Chair, Liberal, Wayne Easter]

You're not coming through, Julie. You can talk to the technicians. We'll come back to you. I'll put Mr. Fraser on first and then we'll come back to you, because we can't hear you at all.