Finance Committee on April 30th, 2020

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

I don't mean to interrupt. I'm on the English channel and the translation's not coming through.

[The Chair, Liberal, Wayne Easter]

Can the technicians check that, please?

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

Mr. Chair, if I may, I was not in French mode, but in floor mode. It's just like in the House. Now it should work.

[The Chair, Liberal, Wayne Easter]

Okay, that would be why, Jennifer. If he's on the French channel, the interpretation will come through better. When you're speaking in English, use the English channel. When you're speaking in French, use the French channel. It makes it a lot easier for the interpreters.

Peter, you have six minutes.

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

Thanks, Mr. Chair.

Thanks to our witnesses. We hope your families continue to be safe and healthy. As my colleagues have done, I share my condolences with the families of the victims in Nova Scotia, and we think of our Canadian Forces members as well.

I want to start by asking about the issue around tax havens. Other countries have taken action. France, Denmark and Poland have all said public money, corporate bailouts and those kinds of public funds will not be used for companies that use overseas tax havens.

Putting aside any direct support to workers, can the government be clear about the issue of tax havens? The Prime Minister has contradicted himself in English and French. The Minister of National Revenue has contradicted the Prime Minister. I'd like the parliamentary secretary just to state very unequivocally that any corporate bailout funds will not used for companies that use overseas tax havens.

[Sean Fraser, Liberal, Central Nova, NS]

Peter, as a point of clarity here, which programs are you speaking about? Is it the emergency measures more broadly or measures that have not yet been announced but may be in the future?

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

It's measures that have not been announced but that will be announced, and any direct support to corporations that isn't going to workers but going directly to the corporate side.

[Sean Fraser, Liberal, Central Nova, NS]

Look, I think you'll appreciate that I'm not in a position to speak about the details of programs that have not yet been developed or announced for, perhaps, obvious reasons.

Each of the programs you've seen announced to date has been to respond to a targeted need. I used the wage subsidy example previously because it was trying to target wage subsidies. To the extent that other programs seek to meet similar needs, I suppose the same answer would apply.

I will not, at the cost of the Canadians we are trying to support, let a particular rule prevent that support from reaching them. However, that doesn't mean that we can't work together, simultaneously, to continue our work to both punish those who evade taxes illegally and change rules that would create a fairer tax system.

I think we would agree that all Canadians, whether they're individuals or businesses, need to pay their fair share, but I'm not in a position to speak about the details of programs that do not yet exist.

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

The amount, according to the Parliamentary Budget Officer, as we know, is more than $26 billion a year, in both legal and illegal tax evasion. Of course, this government has expanded the access of the corporate sector to legal tax evasion through the use of tax havens and treaties with tax havens.

I'll move on to two other issues.

The first is the issue of banks, and certainly, we're moving up to May 1. We have seen mortgage deferrals approved but always with interest, penalties and fees in the banking sector. Of course, the credit card rates and lines of credit continue to be very high. The credit union sector has reduced in many areas to zero per cent for credit cards and lines of credit for Canadians struggling to get through this crisis. The banking sector has said very clearly that if the government provides direction, they will follow. Why hasn't the government stepped up yet to ensure that there isn't profiteering during this crisis by the banking sector, by Canada's big banks?

Second, around the issue of rent relief for May 1, the federal government did take initial steps around commercial rent relief, but one-third of Canadian renters, one-third of Canadian families, are going to have difficulty paying their rent tomorrow. Will the government take steps immediately to provide the same rent relief for residential tenants that they provided for commercial tenants?

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much.

Perhaps I'll start with the rent piece and, if time allows, address the banks, because I know there's a lot to unpack in just a few short minutes from that question.

The rent piece for residential circumstances is something that's not lost on us. There are, obviously, jurisdictional challenges because of the provinces' primary jurisdiction. That's not a good answer to somebody who wants to pay rent this month and has a limited ability to do so. That's why our focus was on delivering direct personal income support to those who were affected in the early days.

You'll recall that it wasn't just the CERB we put in place but also programs like the enhanced Canada child benefit, the enhanced HST rebate and certain other measures that delay amounts that could be owing to the federal government. To the extent that we had existing mechanisms to get support to Canadians directly and expeditiously, we have used them. As I said in response to a previous answer, I don't want to take anything off the table. We have an open door with our provincial counterparts should they want to tackle problems of this nature.

To the point you made in respect of our banks, I appreciate that there is a need to protect against unjust profiteering. I would suggest that, at this time, when I look at what markets are projecting, banks are not in a position where they are racking up immense profits on the backs of Canadians. They have taken some steps with respect to mortgage deferrals. We've seen a reduction in credit card rates certainly by credit unions, but across the board for many of the large companies.

They've also been an excellent partner, I have to say, with the expeditious rollout of the Canada emergency business account, which has now helped almost half a million businesses in the past few weeks alone. We do need to partner with the banks. We have to ensure that there are protections in place so that they don't profit on the backs of vulnerable Canadians, but they're going to be an important part of this emergency response and the economic recovery.

[The Chair, Liberal, Wayne Easter]

Peter, let's have a fairly short one if you could.

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

The federal government has tools. Why aren't you using them so that those supports are in place?

[Sean Fraser, Liberal, Central Nova, NS]

With respect, in our country's history I think more supports have been advanced in the past few weeks than at any time outside of a global armed conflict. The supports we've put in place to ensure Canadians have the ability to weather the storm include a $2,000 monthly payment that allows them to earn up to $1,000, cheques directly to Canadians in the form of the Canada child benefit or the HST rebate and, for businesses, interest-free loans, wage subsidies and rent supports.

Frankly, I can't imagine a swifter response could have taken place to target the gaps that revealed themselves just a few short weeks ago as a result of this pandemic.

[The Chair, Liberal, Wayne Easter]

Okay. We'll have to end that round there.

We'll take two more questioners for you, Mr. Fraser, and then we'll let you off the hot seat and put the officials on.

We'll start with Mr. Cooper and wrap it up with Mr. Fragiskatos.

Michael, you're on.

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

That's great. Thank you very much, Mr. Chair.

Thank you, Mr. Fraser, for your submissions.

I want to focus on CEBA. A lot of businesses in my riding, indeed right across Canada, don't qualify due to various issues respecting eligibility. These have been well identified. I would submit many are easy to fix and would go a long way to providing businesses with the liquidity they desperately need to stay afloat as they make the tough choices about whether they can go forward or shut their doors altogether.

One of those simple fixes involves the restriction, namely that to qualify one must have a business account. Sole proprietors and real estate agents often don't have a business account. They operate out of a chequing account.

Is the government looking at addressing this, and if not, why not?

[Sean Fraser, Liberal, Central Nova, NS]

There's a short answer to this question and a long answer. I'll start with the short one because I know you have a limited amount of time.

The Canada emergency business account, like the other programs we put forward, is designed to target certain fixed costs for businesses that are having a difficult time as a result of this pandemic. Although the program has been frankly working very well, we have heard there are certain gaps that leave some business owners who could benefit from this program without access to it.

Some of these businesses can benefit from other measures like the announcement I shared during my opening remarks around the regional development agencies or through the community futures program, but others may find that doesn't provide the solution they need.

To your question, there is an openness to addressing this problem to extend supports to businesses that so far do not qualify for the emergency business account. Without getting into the full details of the long answer, some of the factors that are leading to their current exclusion from eligibility are there for good reasons, such as the payroll threshold of $20,000, which I know has caused some consternation with some national stakeholders because that program may not allow certain individuals to qualify, depending on how they pay themselves.

That payroll test also provides a very quick reference for banks to determine who is eligible for the program and provides protections against abuse by organized crime, among other things. Though there may be certain simple solutions, they tend to become less simple when you dig into the consequences of simply abandoning certain requirements.

To the extent that you have suggestions that could improve this policy, I am interested in them. In that regard, I'd like to thank your colleagues, Mr. Cumming and Mr. Poilievre, for some of the suggestions they have made recently in the public sphere.

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

Speaking of the $20,000 payroll eligibility requirement, I've heard from a number of start-ups in my riding that don't qualify because they opened their doors in November or December or after January 1, and of course if you opened after January 1, you're out of luck because it's based on a 2019 payroll.

Is the government considering allowing businesses to use a PD7A statement, with respect to 2020 payroll activity? That would allow some of these small businesses that are start-ups that don't qualify under the current rules because they don't have a 2019 payroll, but otherwise would meet that payroll requirement, to qualify.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you for the question. I understand the concern. Believe me, if you wanted to canvass members of Parliament, I think you would have a pretty good idea of what kinds of concerns are popping up. People are reaching out to our offices more often than they ever have before with questions and concerns about their eligibility.

Specifically on the issue, there's a distinction, just based on the language you've used, between new businesses and start-ups in the traditional sense. On the question as it pertains to new businesses that may not satisfy the payroll requirement because they haven't been paying people long enough to qualify, even though their annualized pay may exceed $20,000, that's one group that we're looking at finding solutions for, although they may be eligible through some of the programs that will be released through the regional development agencies or the community futures program.

For start-ups , the challenge is more specific in that many of them have been around for a few years but are at a pre-revenue stage of their business's evolution. For those business owners, we've made a major investment through IRAP to help ensure that the tech sector can continue to exist and thrive in Canada. We're looking at what further measures we can put in place to ensure that they have access to the cash they need to survive this storm.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there. That was a very good series of questions and answers, folks.

We'll have to wrap it up with the parliamentary secretary with Mr. Fragiskatos.

Go ahead, Peter.

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

Thanks very much, Mr. Chair.

Thank you, Mr. Fraser. You were good enough to pass along birthday wishes at the outset of today's meeting, and I know that other colleagues did. There was a question as to how old I am. I'm not a day over 25, give or take; maybe give.

In any case, Mr. Julian didn't bring up basic income today, but he's brought it up, as I think you know, Mr. Fraser, at our deliberations once or twice, or 17 or 18 times, in the past few weeks. Why didn't the government go down this path? What were some impediments to our deciding to pursue a basic income?

[Sean Fraser, Liberal, Central Nova, NS]

Thanks for this question. My ideological previous position had me curious about whether a basic income would have been appropriate when this pandemic first revealed itself to be of the magnitude that we now understand it to be. When we actually dug in to understand the best path forward, there were certain shortcomings on the approach that our colleagues from the NDP had been calling for.

If we simply extend a $2,000 payment to all Canadians monthly, a few problems come up. One of the primary issues is that it's not particularly well targeted. We tried to develop programs that reach Canadians who are in need as a result of this pandemic. For example, the members of this committee, who are all still working and earning an income and have not seen a decrease in what they take home each month, don't necessarily need access to a universal payment.

Similarly, the timeliness of our ability to send money to all Canadians is not as simple as it seems, on first blush. There's not a “send money now” button sitting in the Department of Finance offices where we can simply have money magically appear in accounts, despite what some people may think, because CRA has a fairly comprehensive dataset. We found that it was quicker to deliver benefits directly to Canadians in need by using existing mechanisms, such as the Canada child benefit or the GST rebate program, and developing a single new simple application portal through the CERB, which has now provided benefits directly to seven million Canadians who've seen an interruption to their income as a result of this pandemic.

I just want to point out the remarkable work of our public service. At one point in time, this particular program was processing, I believe, a thousand applications per minute. This is a remarkable achievement in government. Quite frankly, in my lifetime, I don't know that I've seen a more impressive rollout of a single policy to date.

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

Thank you very much for that.

Can I ask you about how our overall policy response has spoken to the needs of those on the margins or of those living in poverty? There's always been this concern in terms of crisis and how it impacts particularly those who are living in poverty or who are, as I say, living on the margins, who are facing particular stresses. Are there specific examples you would point to that you think are quite relevant?

[Sean Fraser, Liberal, Central Nova, NS]

Absolutely, and thank you for the question. I know you've been a tremendous champion for Canadian charities and the non-profit sector that help some of these most vulnerable Canadians.

I will address some of the measures that we've put in place to help those organizations help people in need. First, though, I'll point out that some of the benefits that have near-universal application to those who have experienced a loss of income in this pandemic also help those who are living on the margins, and perhaps disproportionately help them, given the proportion of their income that a benefit such as the CERB could represent, or the enhanced payments through the Canada child benefit or HST rebate, which disproportionately help people from lower-income backgrounds.

In addition to those benefits that may apply to people who are not living in poverty, but cover them as well, we realized that there are certain organizations that are essential to our communities that have perhaps never been more essential. We rolled out a series of supports for charities like the United Way to help seniors who may be in their homes and can't afford their groceries or are unable to reach out to members of their community for assistance. We've seen massive investments to help deal with the operating costs of essential organizations such as food banks.

We've been trying to target supports where they are most needed. I have to say, over the past few years, my eyes have never been so opened to how difficult it is for a person who's living in poverty just to scrape by in Canada. When you start to knock on the doors of seniors who are trying to decide whether to pay their rent and eat unhealthy food...it can be absolutely heartbreaking.

I appreciate your advocacy for us to continue to fund families who are living in poverty directly, and your support for these organizations that provide essential services to those who are facing the greatest need.

[The Chair, Liberal, Wayne Easter]

Thank you for appearing before us on behalf of the minister, Mr. Fraser.

I should explain to the committee, Sean had to come in fairly late in the game. The minister was available tonight at seven, I believe it was, but because more committees are functioning now, and Parliament can only do two at a time, it became impossible for him to take that time slot. We did look at tomorrow for Minister Fortier, but that was impossible as well because we would have had to cancel seven witnesses and move that all around.

Thank you very much, Mr. Fraser, for filling in.

With that, we will go to questions to officials. I expect you're staying as well, Sean.

The questioning rounds will go to five-minute rounds. The first one up will be Mr. Morantz, then Ms. Koutrakis, then Mr. Brunelle-Duceppe and Mr. Julian.

Marty Morantz, you're on.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

This is to any of the public servants who could possibly answer this.

I want to circle back to something Mr. Fraser was talking about. One of the questions I've been hearing from constituents is why their businesses don't qualify for the CEBA because they're new. I'm delighted to hear Mr. Fraser say that you are analyzing that.

Could you give us some sense of what you're looking at, in terms of rectifying that aspect of the unfairness in the CEBA program?