Finance Committee on April 24th, 2020

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Very good. If you could submit those materials to the clerk, it would be helpful.

I want to address another issue that a lot of people don't associate with St. Albert, and that is homelessness. We are one of the more affluent communities in the province, so many people would be surprised to learn that it is a challenge. Dealing with it is something that you, as mayor, have championed, and you have shown a great deal of leadership.

I was wondering if you might be able to speak to some of the challenges around homelessness during this COVID pandemic, as well as any gaps you see and any additional role for federal leadership.

[Cathy Heron]

I established a task force on homelessness right after the election in 2017, recognizing that we do have an issue. Sometimes that issue is hidden, especially in affluent communities such as ours, but it does exist. The last counts in our city showed about 160 homeless people, ranging from those on the brink of homelessness to people living rough in our river valley.

As I mentioned earlier, we're part of the Edmonton metropolitan region, so St. Albert does not have access to provincial funds for homelessness. The answer that I always get from our provincial government is to let Edmonton take care of your homeless.

Mayor Don Iveson of Edmonton and I speak frequently about this inadequacy, this unfairness that Edmonton would have to deal with the St. Albert residents and their homeless, so the two of us have been really advocating to try to open up some mats and beds here in St. Albert. I've yet to have support from my provincial government on that. I do know there was some federal support, but it always funnels through the province, so I cannot access it. I have agencies such as The Mustard Seed ready to set up beds in our Salvation Army. We're ready to go. I just need access to the funding so I can take care of my own residents.

The outcomes for the homeless will always be better if they can access those supports within their own municipality, close to their families, close to their friends, close to their hometowns, instead of going into the big city and getting sucked into lifestyles that sometimes are inescapable.

[The Chair, Liberal, Wayne Easter]

Okay. I thank you both.

I'll just mention to people that if a question is asked and somebody else wants to answer, raise your hand. I might see you. I can't see everybody on the one screen, so I have to move it to two. Raise your hand, and if I don't see you, yell.

We will turn to Peter Fragiskatos.

Peter, the floor is yours.

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

Thank you, Mr. Chair, and thank you to the witnesses.

My questions are for the FCM and Mr. Karsten.

Mr. Karsten, thank you very much for making the case. I'm certainly very cognizant of the challenges faced by municipalities. I'm in touch very regularly, almost daily, with our mayor in London, Ontario, Ed Holder, and with our budget chair, Josh Morgan, who is actually London's representative on the FCM. I believe you know Josh. He's doing an incredible job as well.

Could I ask you about the $10-billion ask that the FCM has put forward to the federal government? Is this a one-time thing, Mr. Karsten?

[Bill Karsten]

Thank you for that, Peter. Yes, I know your mayor well, and Josh is a great board member at FCM.

What we called for in the release yesterday is actually for this to be reviewed again in four months' time. I think I mentioned that in my notes. That is important, because we're not predicting at this point what the losses may be in many potential revenue streams, such as revenue loss from property tax deferrals. Some municipalities made some predictions as to what that may be, but we don't have a clear number.

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

I am asking the question, though, Mr. Karsten, to recognize what the release said and what you put to us today. Some are fearful that this could lead to a situation of dependency, such that if the economic crisis before us were to continue, the municipalities would continue to rely on the federal government for large contributions of financial support.

What do you say to that kind of concern?

[Bill Karsten]

What I say to that, respectfully, is that this is a crisis. We've certainly recognized that COVID-19 was not predicted, and it's an unprecedented time that we live in. Quite frankly, the revenue losses that we're experiencing currently could never have been predicted. When we hear about $400 million in revenue losses from transit and hear some of the personal examples you've heard from different mayors, I can't predict what the future will hold in other losses.

However, no, the intent is certainly not to become dependent on federal financing. Municipalities have certainly proven in the past, with various governments, that we'll put every dollar we have in our budgets to the best use that we can, and we'll continue to do that.

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

Mr. Karsten, I understand. I don't mean to cut you off. It's just that time is limited, even though we have a very generous chair.

The point I'm making is that certainly I recognize that the ability to raise funds on the part of municipalities is constrained constitutionally. It's completely fair to make the case that you need help. I think you do need help, and I hope the federal government offers assistance, but I just want to know some of the parameters of how that would proceed.

You mentioned the provinces. To your credit, you did say your association realizes that there is a provincial role and that the province shouldn't abdicate its responsibility.

In 2019, the Institute on Municipal Finance and Governance at the University of Toronto put out a paper, which I'm going to quote from briefly as follows:

With the exception of Québec and Newfoundland and Labrador, provincial governments in Canada also levy a property tax. The ostensible rationale for provincial levies is to fund a portion of public schooling, but in fact property taxes are often simply part of provincial general revenue—they are not always earmarked for education.

It then concludes:

...if provincial governments abandoned the property tax, municipalities would have sufficient revenues to meet expenditure needs and would not have to ask for additional tax tools.

Taking that into account, I know you're talking not about additional tax tools, but you're asking for money. I wonder whether the province should look at doing this. I know there have been questions raised as to whether the Ontario government would consider abandoning the provincial property tax.

Does the FCM have a particular view on it?

[Bill Karsten]

No, we don't. On the property tax itself, certainly there are other reports throughout North America, and probably every provincial association in Canada has looked at that. The actual property tax revenue, based on real assessment, is still the model that's used throughout North America. It is no doubt the model that everyone is currently using.

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

What role should the province have here?

You're making the case that municipalities need assistance. I think one can also make the case that everyone should have skin in the game. What should the province be putting on the table?

You're asking for $10 billion from the federal government. How much should the province be putting on the table?

[Bill Karsten]

Again, I appreciate the question. I really, truly do. I know the intent is sincere in terms of having us advocate for talking to the provinces as well, and that's exactly what we're doing.

My respectful answer to you is that this crisis is just too serious and urgent and it just won't wait for a jurisdictional argument. It's about the safety of Canadians and requires immediate federal intervention. What I said yesterday in the press with my colleague Don Iveson, who is the mayor of Edmonton, and in fact, with the mayor of Gatineau, is that we're looking for federal leadership. The Federation of Canadian Municipalities has a partnership with the current federal government. We've had unprecedented gains. We respect that and appreciate it. This is a time for leadership.

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

I understand. I simply hope there's an ask on the part of the provinces. I think the provinces need to step up too.

[Bill Karsten]

Thanks for referring to it that way, because make no mistake, our mayors across the country and our provincial associations are talking to the province as well.

[The Chair, Liberal, Wayne Easter]

Folks, we'll have to end it there. Thank you very much.

Next we'll go to Mr. Ste-Marie, and then on to Mr. Julian.

Gabriel.

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

Thank you, Mr. Chair.

Good afternoon, everyone. I want to acknowledge all the witnesses and thank them for their presentations and the issues that they raised.

Ms. Bolduc, you raised three issues. I want to address them. You said that very small businesses can't access the programs currently in place. Can you provide some examples and suggest possible solutions?

I'll now ask my other questions all at once. You suggested that high-speed Internet be considered an essential service.

Minister Wawzonek asked that funding be made available to continue developing high-speed Internet in the regions. You took things one step further by asking that high-speed Internet be designated an essential service. What does that mean?

You also talked about the importance of supporting local media. Again, can you provide some examples and suggest possible solutions?

[Claire Bolduc]

Thank you for your questions.

I'll provide a concrete example. A vegetable and fruit farm grows produce only in the summer. Often, the owners don't pay themselves wages, but dividends at the end of the season.

To access the Canada emergency response benefit, Canadian businesses must pay $20,000 in wages. As a result, some small businesses can't receive the benefit because the wages were paid in dividends. However, this assistance is extremely valuable to businesses, especially this year. Seeds, certain material needed for the production process and some fertilizers have been harder to come by.

The same holds true for tourism businesses and activities. It's more or less the same thing. Since the owners of these businesses are often paid in dividends, the businesses don't qualify for the benefit.

I can also give the example of one of my colleagues who owns 20% of a microbrewery and who is the reeve of his area. He can't access the benefit. According to one of the eligibility criteria, business owners who are also elected officials can't access the benefit. However, this small business is important to his community. These types of people are often called upon to work in the municipal or political sphere because they have strong foresight and development skills. Two types of owners are therefore being denied the proper assistance.

You asked about high-speed Internet. As soon as the Canadian Radio-television and Telecommunications Commission, or the CRTC, declares high-speed Internet an essential service that must be available everywhere, at an equivalent price throughout Canada, we'll have a very different attitude towards the major providers. Currently, the providers are using all the government programs at their disposal to improve the highly profitable service concentrated in urban areas. However, very often, rural areas—farmers, forestry workers and outfitters—don't have access to this service. Tourism businesses have limited access to it.

The providers find it extremely beneficial to use the subsidies and assistance provided by the various levels of government. As a result, the highly profitable area becomes even richer and the other communities are neglected.

The request is clear. It doesn't cost the government anything, since the money has already been announced. However, this will fundamentally change the situation regarding high-speed Internet service.

In terms of local media, the outlets speak to locals about locals. We need these outlets to deliver messages to the public. This measure affects local culture, but it's also a public safety measure. At this time, the outlets have lost very significant advertising revenue. They depend on advertising, but they've lost this type of revenue.

How could the government compensate with appropriate advertising? We're not asking the government to give blank cheques. However, we're asking the government to implement advertising and promotional campaigns. For example, one measure could be to have the government purchase advertising space in various media and offer the space to small and medium-sized businesses. The government would then kill two birds with one stone. The government would support both local media and small businesses.

These measures are worth considering. They cost little, make a significant impact and help ensure the ongoing vitality of rural communities and the regions. These types of measures can easily be implemented.

[The Chair, Liberal, Wayne Easter]

We'll have to pick you up in the second round, Gabriel, or right at the second round.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

It's Mr. Julian. Then, in the next round, we'll start with Mr. Morantz and then move on to Mr. McLeod.

Peter.

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

Thanks very much, Mr. Chair.

Thanks to all our witnesses for being here today. We hope that your families are safe and healthy.

This is the federal finance committee, and we know that the federal government gets the majority, the bulk, of tax dollars in this country. It's very appropriate that we have this session today. My questions, of course, will be addressed to two hard-working local mayors who have been putting in time, basically 24-7, since the beginning of this pandemic. I have a question for Mayor Hurley and a question for Mayor Coté to start.

For Mayor Hurley, you mentioned the wage subsidy and the fact that it doesn't apply to municipalities, despite the fact that there have been repeated calls for that to happen. How important is it that the wage subsidy also be available to municipalities? How should it be implemented when it comes to cities?

For Mayor Coté, you've spoken very eloquently about the impacts on the transit system in the Lower Mainland. If the federal government does not provide supports, what are the long-term implications coming out of the pandemic for transit systems both in the Lower Mainland and right across the country?

[Mike Hurley]

Thanks, Peter, for those couple of questions that I think you've thrown my way.

First of all, if the emergency wage subsidy were extended to municipalities, it would allow us to bring many of our workers back to work and use them in other ways throughout the city. As we all know, this pandemic has led to many social issues within the city. Seniors are not able to get food as they are unable to leave their homes, for one issue. The homeless issue is just picking up like we've never seen it before and, as you know, we have opened up some of our ice rinks to allow the homeless to come in and have a safe and warm place to stay, while being able to keep the social distancing that we all know is so important. Being able to bring our staff back would relieve so much pressure on those two fronts alone, and allow us to do even more than we're doing.

This is what I would propose for how this could be managed within the federal government. Given that the cities, for some many years, have contributed hundreds of millions of dollars towards the UI program, without really any of that money being taken out of the bank, so to speak, from the municipalities' employees over so many years, that could be harmonized, in my view, with the emergency wage subsidy. That could allow us to bring our staff back and put them to work doing the good work that needs to be done in the city.

If the government would harmonize somehow those two benefits for an extra 20%, that would allow us to bring our staff back to work, instead of their being home collecting 55%, and we could start down the road of doing even more in our communities. That is how I would propose that the government could look at this.

[The Chair, Liberal, Wayne Easter]

Mayor Coté.

[Jonathan Coté]

As I mentioned in my opening statement, our transit agency is already looking at implementing cuts of about 40% to our transit system here in metro Vancouver. If, over the next few months, though, we're not able to get provincial and federal support, and continue to lose the revenue that we anticipate even with the cuts, we will have to be looking at a difficult discussion about cutting transit service even more.

I think it is going to be very odd to the general public that, as we move out of the health crisis and move into the economic recovery, we are going to have a failing transportation system that is going to provide fewer and fewer mobility options at the exact time people need more and more options there. I think we're dealing with an immediate financial crisis but also longer-term issues. Our transit is estimating a revenue deficit in the range of between $450 million to $700 million this year. Currently we are using our reserves to be able to help support the losses, but these are reserves that were put in place to help maintain and build our transit system. Those reserves would be fully depleted by later this fall, into the end of the year.

I think that certainly should highlight the urgency we face. I also want to be clear that the challenges we face are challenges that are faced by major transit agencies all across the country.

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

Thank you for that. I have a brief follow-up question, first to Mayor Coté and then to Mayor Hurley.

You flagged providing support for the homeless. Infrastructure programs need funding. What are the other things, briefly, that the federal government could be doing?

[Jonathan Coté]

I'll jump in. Our immediate need is the financial challenge that we're facing because of lost revenue, and that's where our focus is. Longer term, as we start to rebuild our communities, rebuild our country after this health crisis, I think agencies like transit agencies would be a perfect fit for shovel-ready infrastructure projects. I think it's a little premature to be getting into that discussion right now, but as we move into the recovery phase, I think that would be an interesting conversation among the federal government and cities and transit agencies about how to deliver infrastructure projects.