Evidence of meeting #22 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was crisis.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Cathy Heron  Mayor, City of St. Albert
Mike Hurley  Mayor, City of Burnaby
Jonathan Coté  Mayor and Chair of the Translink Mayors’ Council, City of New Westminster
Bill Karsten  President, Federation of Canadian Municipalities
Caroline Wawzonek  Minister, Department of Finance, Government of the Northwest Territories
Claire Bolduc  Reeve, Municipalité régionale de comté de Témiscamingue
Raymond Orb  President, Saskatchewan Association of Rural Municipalities
Brandon Ellis  Policy and Advocacy Specialist, St. John's Board of Trade
Adam Brown  Chair, Canadian Alliance of Student Associations
Philippe LeBel  President of Union étudiante du Québec, Canadian Alliance of Student Associations
Ian Lee  Associate Professor, Carleton University
Nick Saul  President and Chief Executive Officer, Community Food Centres Canada
Pierre Céré  Spokesperson, Conseil national des chômeurs et chômeuses
Agnes Laing  Owner, Corona School of Gymnastics
Paul Davidson  President and Chief Executive Officer, Universities Canada
Kevin Milligan  Professor, University of British Columbia
Wendy Therrien  Director, External Relations and Research, Universities Canada
Sasha McNicoll  Senior Specialist, Policy, Community Food Centres Canada

2:05 p.m.


The Chair Liberal Wayne Easter

I call the meeting to order.

Welcome to meeting number 22, panel one, of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of Tuesday, March 24, the committee is meeting on the government's response to the COVID-19 pandemic.

In order to facilitate the work of our interpreters and ensure an orderly meeting, I would like to outline a couple of rules.

Interpretation in this video conference will work very much the same as it does in regular committees, and a number of you have been before the committees before. You have the choice at the very bottom of your screen of floor, English or French. Speak as slowly as you can and as clearly as you can for the interpreters. Your mute button is down in the bottom corner. Stay muted until you're called upon, if you could.

As chair, and on behalf of the committee, I want to thank everyone for coming. We've been trying to get a lot of witnesses in. I know that SARM has been trying to get on here for about three weeks, for example. There are a lot of witnesses on this panel, eight, and I'd like you to hold as tightly as possible to the five minutes so that we have time for questions.

With that, we'll start.

We'll go to the City of St. Albert, if we could, with Mayor Cathy Heron.

2:05 p.m.

Cathy Heron Mayor, City of St. Albert

Good afternoon, everyone.

Thank you to the members of the committee for inviting me to speak. This is an excellent opportunity to identify some of the work St. Albert has undertaken at a municipal level through the response phase to this pandemic and to discuss opportunities and challenges we foresee in the mid to long term as we prepare for recovery.

My name is Cathy Heron. It is my honour to serve as the mayor of the City of St. Albert. I also serve as the vice-president of the Alberta Urban Municipalities Association.

St. Albert is consistently recognized as one of the best communities in Canada in which to live and raise a family. Positioned within the Edmonton metropolitan region with over 66,000 residents, we encounter the same opportunities and challenges that big cities do yet maintain our small-town feel. St. Albert has been a leader on a number of fronts in recent years, including in gaining international recognition as a smart city, banning conversion therapy and being recognized as the healthiest community in Canada.

As of today, Alberta Health Services has reported that 27 of our residents in St. Albert have contracted COVID-19. Of these cases, three are still active and 24 have recovered. Thankfully, none of our residents has succumbed to the disease, and we hope this remains the case.

Our local RCMP and municipal enforcement services report that our residents are doing an excellent job in complying with the public health orders, avoiding large gatherings and maintaining physical distancing. Our businesses and residents have demonstrated their willingness to make the sacrifices required for our city to overcome this challenge and to create a new normal in our community. We are really grateful for the high level of compliance in St. Albert and have every reason to believe this co-operative attitude will continue. This is one of the reasons we have, to date, not felt the need to declare a local state of emergency.

When the World Health Organization declared a pandemic, we activated our emergency operations centre to centralize and coordinate our response to COVID-19. I believe that the steps taken in St. Albert to respond to the pandemic are similar to the actions of other municipalities across Canada. For example, we've taken actions to provide immediate tax and utility relief through deferrals, we have offered free transit, and we have undertaken cost-reduction measures such as temporarily laying off 30% of our workforce.

While we are still very much in the response phase to this pandemic, St. Albert city council has already struck a recovery task force to help guide us through the balance of 2020 and the year to follow. Ultimately, the successful future emergence will link back to our ability to access revenues today. What we're going to need from the federal government are assurances of improved access to federal support and its alignment with our provincial government.

Federal support to backstop municipalities is essential for three reasons. The federal government has the best and most affordable access to market liquidity. A federal program can be prolonged, which I expect is going to be necessary as we learn about the longer-lasting impacts of the pandemic over time. It's going to take time for municipalities to adjust their governance and business models to the new way of doing things, and a return to positive economic positions will lag based on that turnaround time. Finally, municipalities are where the economic recovery will happen. Encouraging cities to take on more debt or run a deficit only postpones recovery. Our outdated fiscal framework has brought us to a tipping point, and we have limited avenues to cash flow.

At this time of uncertainty, Canadians need support and leadership. No matter where it comes from, it needs to be dependable and aligned, and it needs to rise above partisan politics. As municipal leaders, we're going to be on the front line of helping to reimagine our communities in a post-COVID world, but we need the tools to do that. Ultimately, all three orders of government have a role to play to support Canadians through the pandemic response and recovery period. The City of St. Albert is committed to working with the provincial and federal governments to find solutions that support our residents and businesses in the coming months.

As I mentioned, federal support to backstop municipalities will provide a level of certainty and enable cities like ours to focus on providing essential front-line services to residents and businesses in our communities. Any support, whether it be operational injections or capital, will need to be fast and easy. Municipalities have always appreciated the gas tax and see it as the perfect tool to deliver support.

I do believe that this will be the very first time in recent history that our level of government has reached out asking for this type of help, and we do not make this request lightly.

Thank you, again, for the opportunity to address you today and to share St. Albert's story. I hope that was under five minutes.

2:10 p.m.


The Chair Liberal Wayne Easter

It was a whole half a minute under.

Now we will go to Mayor Mike Hurley of the City of Burnaby.

2:10 p.m.

Mike Hurley Mayor, City of Burnaby

Thank you for the opportunity to speak today.

Thank you to the committee, and especially to my MP Peter Julian for bringing this forward.

I believe these dialogues are important. They provide a mechanism to share information whereby all levels of government can work together and aid one another, all for the common good of Canadians. The federal government's focus on supports and efforts provided so far during the pandemic are very much appreciated, and we all thank you.

At the local government level, our efforts and the tremendous dedication of our workforce continues to work in step with our local communities, delivering many hours of much needed essential services and never wavering in our dedication and commitment to our residents. However, an urgent need continues for federal government support to local governments to sustain our communities and ensure a successful recovery.

Local governments and their respective communities continue to suffer as many recently announced federal programs do not extend to local government. Local governments are the closest connection to the people as we provide essential services in meeting the needs of residents. Protective services include fire, police, water, sewer, roads and drainage, and garbage collection. They meet the basic needs of our citizens, which must be maintained to ensure livability and sustainability.

Local governments continue to be the mechanism that ensure communities remain safe and citizens receive the basic needs they've come to expect as Canadians in whatever community they live. Current programs offered by the federal government, the Canada emergency wage subsidy, the temporary wage subsidy and the Canada emergency commercial rent assistance have been put in place to help Canadian businesses but none of these are offered to the local governments. We are on the ground every day striving to meet the needs of the citizens and communities directly.

Specifically, the Canada emergency wage subsidy program provides business owners with 75% of the employees' wages to maintain business continuity and to keep employees at work. As one of the biggest local employers, if this program was to be extended to local government, our city would keep staff employed. For the City of Burnaby, facility closures, including recreation centres with pools, skating rinks, libraries and cultural centres have translated to many lost revenues. The financial impact of lost revenues is currently sitting between $5 million and $6 million per month. Anticipated costs related to the pandemic are well beyond normal spending patterns. The pandemic is forcing a financial crisis that the local governments will have a difficult time recovering from without any aid. Some local governments may never be able to recover.

Loss of revenues and additional expenditures have forced the City of Burnaby to lay off 1,500 hard-working and committed staff. We are continuously looking at ways to reduce costs by adjusting operations and cancelling or deferring needed projects in the community. However, these acts are not by any means slowing the financial drain. The vulnerable population, specifically the homeless and seniors, are struggling in the community. Programs previously offered by other levels of government have been downloaded to local government.

The City of Burnaby has extended the provision of warming centres to meet the needs of our homeless population and we continue to reach out to our seniors within the community to ensure their basic needs are being met daily. There is no funding for any of these programs, but as a local government—the people's government—we have gone, and will continue to go, over and above to ensure our citizens' needs are satisfied. This very important and critical work will only be sustainable for so long.

At the very least, the federal government needs to provide local governments with funding similar to the financial aid programs offered to the business community. This would allow us to recall staff who have been laid off, to provide the much needed services required in our community.

Federal aid is urged, and all levels of government must work together to ensure that all citizens, regardless of neighbourhood, from Burnaby to St. John’s, are able to survive this crisis and weather the storm.

I hope you will see that support for local government is an essential piece in ensuring a successful recovery from this pandemic. I hope that the federal government will seriously consider FCM's call for targeted emergency operating funding for cities, as well as my request to the federal government to extend the emergency wage subsidy program, and other programs mentioned earlier, to local governments.

We want to ramp up quickly to mobilize our staff and the community on the important work of restoring our economy. This will ensure that we can return to be the thriving country we all know and love.

Once again, thank you for the opportunity to share my comments and concerns with all of you.

2:15 p.m.


The Chair Liberal Wayne Easter

Thank you very much, Mayor Hurley.

We turn now to the City of New Westminster with Mayor Jonathan Coté.

2:15 p.m.

Jonathan Coté Mayor and Chair of the Translink Mayors’ Council, City of New Westminster

Thank you very much. It's a pleasure to be here. Thank you for the opportunity to be able to share some of the challenges from cities.

My comments today are really going to focus on the impact to transit agencies. I currently serve as the mayor of the City of New Westminster, but I am also the chair of the mayors’ council in Metro Vancouver, which represents the 21 mayors in the region, and the Tsawwassen First Nation.

TransLink, our transit agency, provides public transit service and support to the major road network serving 2.5 million people in the Metro Vancouver region.

We know that COVID-19 has had devastating impacts all across the country and through all aspects of society, but these impacts have been particularly acute for public transit systems. Here at TransLink, our major revenue source is transit fares, and with transit ridership down by 80%, our organization is losing $75 million per month. This is certainly not sustainable, and it is creating tremendous pressure on our transportation agency.

Despite significant declines in transit ridership, we are finding that 75,000 residents in Metro Vancouver are still very much dependent on our transit system. Our surveys have indicated that nine in 10 trips on our transit system today are related to essential services, whether that's working at a grocery store, going to a grocery store, or having to do with health care. Our service is still providing valuable essential service and essential transportation options. Also, 150,000 households in Metro Vancouver do not own a car, so there are many folks in our region who do not have alternative transportation options.

In light of the crisis that we are facing, TransLink has taken difficult steps to significantly reduce service, cutting transit service by approximately 40% in the region.

Despite these very significant impacts, which are impacting riders across our region, TransLink estimates that we are still going to be losing $40 million to $50 million per month because of the revenue shortfalls due to the crisis. I really appreciate the opportunity to come to this committee to implore the federal government to see how it can play a partner role and help support a viable transit service, not only during the crisis but also as we emerge from the crisis. Other countries around the world have already recognized that transit service is important, both at this time and during the recovery, and have developed emergency relief programs.

From the perspective of TransLink, we know that the challenges that we face in delivering public transit are challenges that are faced by major transit agencies all across the country, and that this is really a national issue.

As we deal with the crisis right now, and as we start to plan towards the recovery, we strongly feel that a viable and functioning public transit system will be necessary during both of those phases. Given that this is a national issue facing transit agencies all across the country, we want the federal government to have a serious look at opportunities for emergency relief, with a particular focus on the work that FCM has done in laying out a plan to keep public transit viable in our country.

2:20 p.m.


The Chair Liberal Wayne Easter

Thank you very much, Mayor.

Turning then to the Federation of Canadian Municipalities, we have Bill Karsten, president.

Welcome, Bill. The floor is yours.

2:20 p.m.

Bill Karsten President, Federation of Canadian Municipalities

Thank you so very much, Mr. Chair.

Thank you to the committee for inviting the Federation of Canadian Municipalities to join you today.

I want to take a moment to thank the other mayors who were able to join us today and all of the witnesses who are bringing this information to your attention.

On behalf of our membership, let me say how much we appreciate the steps that have been taken to date by the federal government to continue to hold these meetings. We appreciate the work being done quickly by the federal government to support Canadians in the midst of this pandemic.

This moment requires urgency.

Let me start by being as clear as possible. On behalf of more than 2,000 member municipalities of all sizes from coast to coast to coast, we stand united with one voice. Canadian municipalities are facing a financial crisis that puts Canadians at further risk. This crisis affects communities large and small, urban and rural, in unique ways. Unanticipated costs arise as municipalities across the country support front-line health action and deliver the central response services. At the same time, revenues are plummeting. This is a crisis of non-recoverable losses. Millions have been lost from deferred property taxes, utility charges and user fees, as our previous speaker said, such as transit. To reiterate the loss from transit, cities and communities are losing $400 million each month from lost transit ridership alone.

We estimate that 25,000 jobs have been lost at the municipal level with another 7,000 temporary roles gone unfilled. Much like Burnaby, the numbers are about the same in Halifax at approximately 1,500. These are essential services, not luxuries, that municipal leaders need to maintain now more than ever: police, fire, ambulances when you need them, clear tap water and garbage collection.

With few fiscal tools available and no legal ability to run deficits, local leaders are facing challenges that we've never seen before. I've been a witness at this committee before, and we've said that major economic drivers for Canada are what cities and communities are. These emerging crises represent a destabilizing force of our national economy and the daily lives of all Canadians.

In the absence of significant action from either provincial or federal governments to address severe revenue shortfalls resulting from the COVID-19 pandemic, FCM is calling on all orders of government to work together in partnership. That is why today we are here and why yesterday FCM made an urgent appeal nationwide to the national leadership on behalf of cities and communities across the country. We are calling for emergency operating funding for municipalities, at least $10 billion in targeted emergency operating funding to all local governments as direct allocations. We propose a hybrid formula based on the gas tax fund with a ridership-based allocation for cities that operate transit systems, much like what was mentioned moments ago.

Next, deliver additional emergency operating funding to individual local governments facing very unique financial pressures related to COVID-19. We ask that there be a commitment to revisit the need for additional operating funding in about four months. We ask that local governments have the ability to transfer unused allocations to the federal gas tax program for capital expenditures to help Canada's economy recover when the time comes.

Make no mistake: Municipal leaders are working flat out to help Canadians through this. We realize that there is a provincial role, one we agree they should not abdicate. However, we can't let the impact of that principle default municipalities into deep austerity. This is simply too urgent. It is simply too serious and requires an immediate federal intervention.

Our federal-municipal partnership, which we're very proud of, has delivered remarkable results, as we know. Deepening that partnership now will protect Canadians through this pandemic. We are ready to work with all of you to ensure Canadians emerge from this crisis as safely as possible.

Thank you again so much for having us all here today. I will be happy to take your questions.

2:25 p.m.


The Chair Liberal Wayne Easter

Thank you very much, Bill.

We will turn to the Government of the Northwest Territories, with Minister Wawzonek.

2:25 p.m.

Caroline Wawzonek Minister, Department of Finance, Government of the Northwest Territories

Thank you.

Good afternoon, everyone.

Thank you for your invitation.

I am Caroline Wawzonek, Minister of Finance for the Northwest Territories, and Minister of Justice and Attorney General as well.

I'm aiming for five minutes, but I may be one or two over. I'll do my best.

COVID-19 has exposed the depth of economic and social vulnerabilities in the Northwest Territories, particularly in small communities, from health care access to reliance on airlines for our food security to the lack of Internet connectivity in homes. Our non-public sector economy is driven by the mineral resource industry, primarily diamonds. This is a luxury good commodity market that is susceptible to fluctuations outside of our control. Our population has many pre-existing health vulnerabilities, low rates of educational outcomes and a recent history of both individual and collective trauma stemming in part from residential schools. COVID-19 has brought the collective impacts of these realities and other challenges into sharp focus for us.

Even with all this adversity, I am proud of the way the Northwest Territories residents, businesses and communities have rallied to respect the health measures being put in place to minimize COVID-19 and keep it out of our remote communities.

My opening comments now will speak to both the challenges and the opportunities that COVID-19 has brought into focus and the responses we believe are needed to build our strong and sustainable north.

One of our strengths is our people. The Northwest Territories is made up of very strong and resilient people. We are at our best when we work together, as is being demonstrated by the active collaboration between public and indigenous governments.

Another strength is our mineral resources. Significant mineral resource potential across the NWT’s vast geography continues to exist. Notable examples are lithium and rare earth minerals, which could gain greater prominence if COVID-19 advances the conversation about increased use of green energy.

The Northwest Territories is a key entry point to the Arctic Ocean and the Northwest Passage. The geopolitical importance of the Arctic, as well as direct economic potential, is unaffected by COVID-19.

As for our cultural diversity, we celebrate and protect 11 official languages in the Northwest Territories. Each one is translated in our legislative assembly. Cultural knowledge, particularly interest in indigenous cultures and language, is an area of growing interest across the world.

Many of our strengths have not been diminished by COVID-19. Anecdotal evidence so far suggests that the aggressive measures announced by the federal government, combined with our own government’s support for Northwest Territories residents and businesses, will do much to stabilize the immediate economic situation. We are especially appreciative of the programs that have been targeted specifically for the north, such as the $8.7 million to support Northwest Territories airlines.

As for the challenges that have been brought into focus by COVID-19, the Northwest Territories has the largest infrastructure deficit in Canada. We have airports that allow limited aircraft, a small handful of emergency shelters in only a few regional centres, and high food insecurity. COVID-19 has highlighted, and in some cases exacerbated, these weaknesses.

I have a few other examples for you. One is education. Every school district right now is struggling to provide web-based schooling, very often without sufficient access to computer hardware in homes and with limited Internet connectivity across the territory.

As for our heat and energy sources, people staying home has resulted in higher energy use in an already very high-cost environment. Most communities rely on diesel fuel to heat their homes. It is often the community’s primary electricity generation source. Lest you think the recent fuel price drop is at all helpful in this regard, keep in mind that fuel is purchased far in advance and sent to communities on ice roads.

Overcrowded housing and housing insecurity, leading to transient housing, has put more people into contact with one another, and often they are those who are simultaneously suffering from pre-existing lower health conditions. This is a perfect environment for COVID-19 to spread.

A lack of transportation infrastructure results in communities depending on airlines for food and medical supply chains. Those airlines today are in trouble, with at least one having already closed its doors.

At present, we have very limited own-source revenues. Those revenues are now further depleted by our efforts to provide immediate relief to the financial pressures being created by the collective response to COVID-19. In addition, a reduction of revenues resulting from a loss in personal and corporate income taxes as well as in mineral royalties is expected to have a major impact. Although we appreciate the financial help from Canada to date, we certainly will need more.

We already have limited fiscal room, which impacts our ability to be a primary investor in major products and can create fiscal challenges to act as partners if the investment relationship is being predefined.

There are some opportunities. We were forced to hit a pause button, of course, on regular government business and the pursuit of our government's priorities in order to contain COVID-19, but as we are beginning to plan our restart we have an opportunity to think about what that restart will look like, with a vision of who we want to be in the future.

We are assessing which projects are shovel-ready but could be delayed due to fiscal constraints. We also have several projects that are what I would call “next-stage ready”. These are projects that have some stage of design, planning or permitting. They include, for example, telecommunications connectivity expansion and capacity development; the expansion of the hydroelectricity capacity at the Taltson hydro facility, with a view to moving the Northwest Territories towards cleaner energy in homes and industry, which could then perhaps be a leader in greener mining; the exploration of the Slave geological province, with potential to provide the first direct transportation corridor to Nunavut; the expansion of hydroelectricity transmission lines across the south of the territory; and the introduction and expansion of community-based solar and wind projects.

Here are a few recommendations. One, ensure sufficient borrowing flexibility and a broader diversity of infrastructure investment partnership options, including opportunities for indigenous governments as equity partners. This includes being able to stack funding, in some cases with 100% dollars.

Two, advance the broadband 2020 fund and the promise of broadband access into all homes and communities in the Northwest Territories.

Three, identify social and economic goals within the Arctic and northern policy framework that can be funded for action immediately, or funded for immediate next-stage planning; and commit to doing so in collaboration with the Arctic and northern communities that are eager to be on par with the rest of Canada.

We know countries that invest in the Arctic see real benefits, whether from the natural resources, the access to traditional knowledge, or new opportunities in communications and transportation. We believe this is true of Canada's north as well, and we look forward to being a continuing partner with Canada to achieve that goal.

Thank you.

2:35 p.m.


The Chair Liberal Wayne Easter

Thank you very much, Minister.

We will turn to Reeve Claire Bolduc, with the regional municipality of Témiscamingue.

Reeve Bolduc, go ahead.

2:35 p.m.

Claire Bolduc Reeve, Municipalité régionale de comté de Témiscamingue

Good afternoon, Mr. Chair.

Members of the committee, thank you for inviting us to contribute to this process and to look at the financial resources in place to support all Canadians during the COVID-19 pandemic.

I'm the elected reeve of the RCM of Témiscamingue. I represent a 19,000 km2 area with 19 municipalities, a municipal committee and 16,000 residents. There are also four indigenous communities in this area. We have a large number of unorganized areas. The main activities in Témiscamingue involve agriculture, forestry, manufacturing and tourism.

You can see that our area is mainly rural and that its spaces are multi-purpose. As reeve of the RCM, I'm also a member of the board of directors of the Fédération québécoise des municipalités, a voice for the regions in Quebec. We were all surprised by the pandemic. It has shaken and worried us, and it will continue to worry us for a long time. Both the medium-term and long-term effects will have a major impact on activities and on the way society works for a long time.

I want to thank the Canadian government for promptly announcing assistance measures. The government implemented programs and measures very quickly to help people overcome their challenges. On behalf of the residents of Témiscamingue, I want to thank the Government of Canada and all the parties that contributed to this decision. I'll now draw your attention to a few points that I want the government to consider to ensure that its actions achieve the warranted success.

First, the assistance for businesses, as worthwhile as it may be, completely neglects very small businesses. The criteria established for this financial assistance prevent small businesses from accessing it because they don't meet the set thresholds. The businesses are being denied this assistance, which is crucial in rural communities. The businesses are often seasonal, agricultural or tourism businesses. They contribute to the quality of life in communities, villages and municipalities. They also contribute to land use and promote local resources and expertise. We need these businesses to survive the crisis. It would be a real and significant loss if these businesses were to disappear from our regions. We're already losing some businesses and we'll probably lose many more before they can resume operations.

Therefore, would it be possible to think about the set thresholds and about how to help the businesses that don't meet them? These businesses don't fit into the programs. Could they access measures that would qualify them for the valuable assistance put in place?

Furthermore, in recent weeks, we've been living in a world of lockdowns, online purchases and services, telework, telemedicine and distance learning. However, in rural communities, we live far away from services and we need to travel to access them. We don't have access to a quality high-speed Internet network. Our poor-quality network sometimes stops working altogether. We're asking the Canadian government, which has provided major funding to connect rural Canada, to declare high-speed Internet an essential service. Once high-speed Internet is declared an essential service, its rollout will become mandatory and will happen more quickly. In addition, the cost must be comparable for all Canadians.

Lastly, we can't overlook the importance of local media. While Radio-Canada radio has spoken about Témiscamingue only once since the start of the pandemic, our local radio station speaks to the citizens of Témiscamingue every day. Our community television channels broadcast the news and convince people to comply with the measures in place. We need support for our local media.

I'll certainly have other things to say about assistance for municipalities. However, at the very least, these three rules will make it easier for rural areas to get through this difficult situation.

High-speed Internet, support for local media and, most importantly, access to government assistance for very small businesses will make all the difference for rural Canada.

Thank you again for your attention.

I'll stay with you to answer your questions.

2:40 p.m.


The Chair Liberal Wayne Easter

Thank you very much, Madam Bolduc.

We'll turn to the Saskatchewan Association of Rural Municipalities, with Ray Orb, president.

Welcome, Ray.

2:40 p.m.

Raymond Orb President, Saskatchewan Association of Rural Municipalities

Thank you, Mr. Chair.

My name is Ray Orb, and I'm the president of the Saskatchewan Association of Rural Municipalities, known as SARM. I was born and raised and live in the small farming community of Cupar, northeast of Regina, with a population of 625 people.

SARM represents all 296 RMs in the province and has been the voice of rural municipal government for over 100 years.

I'd like to thank the standing committee for the opportunity to shed some light on challenges rural municipalities in Saskatchewan are facing due to the COVID-19 pandemic. We applaud the federal government's actions aimed at reducing the spread of COVID-19: promoting social distancing and encouraging residents to stay home when possible.

Although we appreciate many of the provisions made in the economic response plan, it is important to note that many in rural Saskatchewan feel left behind by the government's suite of actions. For years, a standing concern for rural Saskatchewan has been broadband, both with connectivity and capacity. The social distancing and isolation measures taken to address COVID-19 underscore the importance of access to reliable, high-speed Internet services.

People are attempting to work remotely and access health care and education from their homes more than ever before. Their inability to do so is resulting in hardship for those in underserved rural areas. As Canadians across the country try to remain connected to family, friends and colleagues via the Internet, many people across Saskatchewan’s RMs remain socially isolated.

We believe greater investment and more innovation is needed in RMs to provide access to services that help to safeguard the health and well-being of residents. Connectivity is critically important as rural businesses and agricultural producers begin to look toward economic recovery that includes participating in the new economy online. The years 2019 and 2020 have been exceptionally challenging for Saskatchewan’s agricultural producers. Ongoing trade disputes with China, coupled with transportation disruption due to illegal blockades, have significantly affected many farmers financially. Now, the impacts of COVID-19 are causing yet another challenge to our nation’s food suppliers.

Agricultural producers are concerned about disruptions to purchasing and delivery of farm inputs such as diesel and fertilizer, and the sale and delivery of their farm production. As operations are affected by uncertainties going into the 2020 production year, the extension of business credit does not provide enough support, as many producers are already heavily indebted. Further measures are required for many agricultural producers to address cash flow issues and continue their operations.

Access to the federal government’s business supports, including the Canada emergency wage subsidy and the Canada emergency business account, may be limited because of how farming operations are structured. Some operations are unable to demonstrate their eligibility for federal income and business supports due to industry and business practices. These include things like inconsistent revenue and receiving remuneration through dividends, rather than through more traditional methods. These methods preclude many operations from meeting eligibility requirements.

While steps have been taken to reduce the tax burden on businesses to help manage the impact of COVID-19, the government still proceeded with increases in the federal carbon tax, which severely impacts Canada’s agricultural community. The carbon tax increase on April 1 has added to the costs of inputs like fuel, as well as production and transportation. At a time when the government is trying to increase the capital available to businesses, estimates show that in 2020 the federal carbon tax will add at least $2.38 in costs per acre on an average Saskatchewan grain farm. We are urging the government to exempt agricultural producers from the carbon tax or offer other direct assistance to offset these increased costs.

SARM understands this global pandemic requires a united effort from everyone. Federal, provincial and local governments need to do their part. In Saskatchewan, RMs are stepping up during COVID-19 to keep key roads open during a time of spring road bans so that rural-based industries like agriculture can move key products as they prepare for another season of producing food to feed communities across the country and the globe. They are providing property tax relief such as deferrals, extending deadlines and forgoing late payment penalties to help struggling ratepayers and businesses. They continue to provide all the essential services that are mandated, even in this time of uncertainty, with limited staffing due to illness, layoffs and budgetary constraints.

Rural municipalities have always faced strict limitations on their ability to generate revenue for the services they provide, because they collect it from taxes on the properties within their boundaries, mostly farmland. COVID-19 and the realities of the economic lockdown are highlighting this fact. We need senior levels of government to realize the negative impacts in the medium and long term on the quality and level of essential services municipalities provide to citizens. Providing services and maintaining essential infrastructure consumes more than 80% of a municipality's incoming revenue. This leaves little ability to reduce costs without cutting back on the municipal services provided.

Coming out of the COVID-19 crisis, as the country requires economic stimulus, please remember RMs when designing stimulus programs. Saskatchewan has the most kilometres of municipal road infrastructure in Canada, at 163,000 kilometres. Rural infrastructure projects, including roads and bridges, are vital to the growth of natural resources, manufacturing, agriculture and tourism industries, and a stimulus program needs to have a small communities component that ensures investments are dedicated to communities of under 5,000 in population and that allows them to focus on strategically repairing the roads and bridges that support these critical industries. Funding needs to be streamlined. A model such as the current gas tax fund is simple and already exists.

In closing, on behalf of Saskatchewan's rural municipalities, thank you to the Standing Committee on Finance for the opportunity to lend our voice to this important conversation.

2:45 p.m.


The Chair Liberal Wayne Easter

Thank you very much, Ray, for raising those points.

Before I turn to the last witness, just to give the members a heads-up on the speaking order for questions, we'll start the six-minute round with Mr. Cooper, followed by Mr. Fragiskatos, Mr. Ste-Marie and Mr. Julian.

We will turn now to the last witness, from the St. John's Board of Trade, Mr. Brandon Ellis.

Go ahead, Brandon.

2:50 p.m.

Brandon Ellis Policy and Advocacy Specialist, St. John's Board of Trade

Thank you, Mr. Chair. It's good to see you again and good to see the honourable committee members. Thank you for extending an invitation to me to provide evidence for your consideration today.

As you just said, my name is Brandon Ellis, and I am the manager of policy and advocacy for the St. John's Board of Trade. The business community of St. John’s, much like the rest of the country, is currently facing unprecedented challenges. Our board has been in constant contact with all levels of government in order to communicate what we have been hearing from our members. The St. John’s Board of Trade recognizes that COVID-19 has caused a public health crisis and an economic crisis. The two are intertwined and must be approached with urgency.

We welcome many of the aspects of the government’s programs that have been unveiled, the wage subsidy being one of them. Countless jobs will be saved because of the announced measures, but they fall short of supporting many businesses that need help during this time. Many businesses that are not essential services have been operating with skeleton staff or been completely shut down for over a month now. They have been asked to wait two more weeks before funds are available. This is too long, in our estimation, as businesses have been waiting for this support since March.

The government has proven that it can deliver funds quickly and efficiently with the success of the CERB program delivered through the CRA. Canadian businesses need the same urgency in receiving financial help. Several weeks from now will simply be too late, and we will see many businesses close their doors, some permanently. In a survey this week from Restaurants Canada, results showed that one out of every two independent restaurants do not expect to survive if conditions do not improve within the next two months. Among restaurant operators, 75% are either very or extremely concerned about their current level of debt. We know that a majority of smaller businesses do not have enough cash reserves to wait several more weeks for relief. Those affected will likely now place greater demand on the CERB.

In addition, we continue to see many businesses that need help now falling between the policy gaps of support programs. These include, as previously mentioned, sole proprietorships that do not have payrolls but pay themselves through dividends. We must cast a wider, more inclusive net to ensure that all businesses that need help can receive it.

The issue of sole proprietors falling through the cracks is of concern to us. It is unreasonably punitive if businesses are meeting the other requirements for government programs to disqualify them for not previously incorporating, as some of the rules for a few of the programs are right now. We ask that government extend the CEBA to sole proprietors who have not incorporated.

We have asked government to cast the widest nets possible with the programs that they have developed. Last week, our chair, Andrew Wadden, who is a local lawyer and concerned business owner, wrote to the Minister of National Revenue requesting a full refund of the GST to all small and medium-sized businesses. The Parliamentary Budget Officer has already completed the partial analysis of our ask. It is in our analysis that this will cover many businesses that desperately need funds to stay afloat. We ask that all businesses, not just those that are incorporated, be considered for a GST refund for the GST that they paid between January 1 and December 31, 2019.

As you may be aware, our province is facing significant financial challenges in both our short- and long-term future. We also face challenges in our offshore oil industry, given the current economic uncertainty. This industry has been a vital economic driver within our province and has contributed greatly to Canada as well. If we are discussing what economic recovery looks like in our province, we cannot do so without highlighting our oil and gas sector.

Over the past two decades, our offshore oil has accounted for 25% of our provincial GDP. Economists are projecting that over $100 billion in royalties and revenues will be accumulated by 2045, and by 2033 oil and gas will generate 19% of all Newfoundland and Labrador jobs. The Newfoundland and Labrador oil industry will provide $3.3 billion in taxes to the rest of Canada. We encourage the Government of Canada to begin implementing policies that will unleash the full potential of our offshore oil and gas policies and begin amending previous policies, such as Bill C-69, which have been proven problematic.

We also have some thoughts on the commercial rent announcement today. I'd be happy to take any questions the committee may have with respect to that.

Thank you very much, Mr. Chair, committee members and fellow witnesses, for the opportunity to provide testimony. I look forward to answering any questions you may have.

2:55 p.m.


The Chair Liberal Wayne Easter

Thank you very much.

Thank you to all the witnesses for your presentations.

Before I go to Mr. Cooper, I'd just like to go to SARM.

Ray, I have a point of clarification. Farm fuel is exempt from the so-called carbon tax. Is it really propane you're talking about?

2:55 p.m.

President, Saskatchewan Association of Rural Municipalities

Raymond Orb

Yes, particularly the propane that's used for grain drying. That's a big issue for some of our farmers.

2:55 p.m.


The Chair Liberal Wayne Easter

Okay. Usually there's a lot of confusion around that, so I just wanted that clarity.

Mr. Cooper, you are on for six minutes.

2:55 p.m.


Michael Cooper Conservative St. Albert—Edmonton, AB

Thank you, Mr. Chair, and thank you to all of the witnesses for your thoughtful testimony.

There's no question that COVID-19 has created many challenges that municipalities right across Canada are facing, not only in terms of cash flow but also in terms of unanticipated costs that will result in unrecoverable losses.

I'm going to direct my questions to my mayor, Cathy Heron.

Cathy, I'm very pleased that you're able to participate today. I know the City of St. Albert administration recently put forward three different financial scenarios about the impact that the continued closure of the municipal facilities would have. As St. Albert is reflective of many mid-sized municipalities across Canada, I was wondering if you could speak to the fiscal viability of a longer-term shutdown and the difference between, say, a shutdown that might end at the end of May, versus one that goes on into the summer or even into the fall.

From a municipal standpoint, what are the challenges?

2:55 p.m.

Mayor, City of St. Albert

Cathy Heron

Thank you, Michael, for putting my name forward to participate today. It has been nice to be here.

I think all municipalities would share the same thought that the length declared for the pandemic and how long we are shutting down our rec facilities, transit and related businesses will impact how municipalities can recover.

St. Albert has three scenarios. Right now we're projecting about a $4.6-million deficit if we open up on June 1. To me that seems highly unlikely. The Alberta government is probably looking at more like July. If we go all the way to August 1, we're looking at a $5.6-million deficit, and then if we're all the way into October, which would be hard to deal with, we're looking at $6 million. That's for a mid-sized city. I'm sure the bigger cities have much bigger numbers, but they would be escalating as time goes on.

Some municipalities will have adequate cash flow reserves. They could liquify investments to deal with this. Some have lines of credit. Some have no access to lines of credit. The economic impact will differ depending on how long we are in this current state. I hope that helps.

2:55 p.m.


Michael Cooper Conservative St. Albert—Edmonton, AB

Yes, thank you.

I understand St. Albert doesn't have a line of credit right now.

2:55 p.m.

Mayor, City of St. Albert

Cathy Heron

No, we don't.

2:55 p.m.


Michael Cooper Conservative St. Albert—Edmonton, AB

In your presentation you alluded to St. Albert's COVID-19 recovery plan. Obviously we're in the middle of the early phase or the mid-phase of this crisis, but now is the time to begin to look forward to what to do in the longer term as we enter the recovery stage, which will hopefully happen sooner rather than later. Maybe you could speak a little more to that and perhaps comment on whether it's a model that other municipalities could look to.

2:55 p.m.

Mayor, City of St. Albert

Cathy Heron

I'd be happy to.

St. Albert is kind of fortunate. Our city manager was in the midst of the fires in Fort McMurray, so he is well versed in emergency response and has gotten St. Albert prepared for anything. When this broke out, we were ready to go into action right away. He also suggested that part of the recovery—and he's seen it in Fort McMurray—is extended. It's 18 months to two years, so we wanted to get our task force up and running early.

We have a concept plan that will have some deliverables, and I will be chairing a group of residents. We always have highly educated responsive volunteers in St. Albert, but I will be tapping some particular ones on the shoulder. I want the chambers of commerce involved. I want the development industry involved. I would like an economist sitting there. That's more on the economic recovery side. At the same time, we're going to have some of the not-for-profits sitting there to talk about some of the social and psychosocial needs that municipalities are going to have.

I'm happy to share the bylaw and outline of this recovery task force if anyone wants it.