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.