Finance Committee on May 5th, 2020

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome, witnesses and members, to meeting number 25 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.

Today's meeting is taking place by video conference, and proceedings will be made available via the House of Commons website.

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

In order to avoid both languages being heard at the same time, members should use the English channel when speaking in English and the French channel when speaking in French, and avoid switching from one language to the other during the intervention. The floor feed can be activated when listening to the meeting.

The use of the headset with the boom microphone is highly recommended.

Beyond that, speak slowly and clearly if you can.

I would now like to welcome our witnesses. Thank you again for coming.

I would ask witnesses to try and hold remarks to about five minutes. That way we have plenty of time for questioning.

We have seven witnesses today. We will start with BILD Alberta Association and Scott Fash, executive director.

Please go ahead, Mr. Fash.

[Scott Fash, Executive Director, BILD Alberta Association]

Thank you very much, Mr. Chair.

As was mentioned, my name is Scott Fash. I'm the executive director of the Building Industry and Land Development Association of Alberta, and on behalf of BILD Alberta, thank you for the opportunity to discuss the impacts of COVID-19 on the construction sector in Alberta.

We represent about 1,700 member companies in the residential construction and land development industry. For clarity, we're the Alberta provincial arm of the Canadian Home Builders' Association, which I'm sure you're familiar with at the national level.

At BILD Alberta, much like you, we've largely been focused on public safety, preserving jobs and helping businesses weather this crisis. Prior to COVID-19, the industry within Alberta supported about 118,000 jobs, paid $8 billion in wages and generated $17.7 billion in investment value annually. Through significant collaboration between the Government of Alberta and municipalities and our industry, we have established modified practices and procedures that have allowed construction to continue.

That said, the industry still has been significantly harmed in both the new construction and the renovation sectors. This harm is a result of cancelled contracts and sales, extremely slow or non-existent sales and indefinitely delayed project closings. This has created a situation where cash flows have stopped or deteriorated rather quickly, resulting in rather significant layoffs.

Even as the pandemic starts to subside, we anticipate that the loss of sales and secured contracts will severely affect cash flow for the coming months and potentially for years. The scale is not yet known in totality, obviously, but anecdotally, our member companies are indicating that they've laid off between 30% and 50% of their staff to date. The timing of if or when these people will be brought back is largely going to depend on the timing of the recovery, which we can't really control; on incentives brought forward; on consumer confidence; and then, obviously, on the overall employment levels within the province of Alberta.

We've yet to see any significant dips in housing starts, but that's largely due to the lagging nature of the statistics within our industry. We know from our members that their sales have declined rather severely. We anticipate seeing some rather significant reductions in housing starts in the latter half of this construction season.

Most of the companies I've talked to are focused predominantly on just fixing the projects that they either had already started or had already put a significant amount of investment into, with most putting any future projects on hold indefinitely. That raises, I think, a lot of concerns moving forward about the health of the industry and its over 100,000 employees.

We do want to commend the federal government and all elected officials for the speed at which you brought in emergency relief and for the credit programming you've brought forward. The approach of implementing tools quickly and then making adjustments along the way was an incredibly prudent decision. We really appreciate the willingness of the government and of all elected members of Parliament to adjust the tools as needed as we've moved through this challenging time.

Particularly, our members in Alberta have been really pleased to see the collaborative work between the CHBA, which is our national association, and the federal government. Some of the adjustments you guys have made initially have indeed helped a lot of our member companies to qualify for the wage subsidy, which they wouldn't have qualified for otherwise. However, the nature of the residential construction industry has still left a number of our member companies struggling and unable to qualify, particularly for the wage subsidy benefit.

We know that the CHBA recently provided some recommendations to the Department of Finance and this finance committee to try to address these issues, and we fully support those recommendations. In particular, one of the major items was allowing for fair value of contracts signed to be permitted, as either an interpretation or a special case when calculating qualifying revenue. That will help a number of companies better quantify and demonstrate the steep decline in sales that's being experienced currently within their sector.

The other item that we were really pleased to see, and that a lot of members are pleased to see, is the Canadian emergency commercial rent assistance program, which I think is going to be an important complement to help address the fixed operating expenses of a lot of these companies. I know that it's still in its early days and that we're awaiting all the details, but we hope that, as with the other programs, the federal government will work closely with CHBA and other partners to make sure that we include as many of these companies as possible.

Moving forward, as we begin to transition from this crisis response to recovery, we in our association look forward to our continued partnership with the Government of Alberta, and I'm sure that's just as the CHBA will collaborate with the federal government. Residential construction has long served as an important economic driver and a source of high-quality and high-paying jobs for thousands of Albertans and millions of Canadians.

At the federal level, we support CHBA's recommendations, which include reintroducing a 30-year amortization period for insured mortgages and adjusting the stress test to encourage seven- and 10-year terms.

At least in the interim, we would recommend reassessing how to or whether to apply GST on sales of new homes. If we consider the use of it, we could potentially use some of the money collected to focus on infrastructure spending that fuels growth, construction and employment.

We would support the introduction of a home renovation tax credit for all types of renovations. Such a tax credit would help stimulate investments and support the renovation sector.

We would love to see you work with provinces and municipalities to ensure regulation and red tape do not excessively delay the supply of new housing or add excessive costs to construction, thus reducing affordability.

Finally, a really big item is to work with financial institutions to ensure access to flexible solutions to manage defaults, credit needs and other financial challenges in the coming months. I know access to liquidity and banks' getting aggressive in calling in debt will be a huge concern for a number of our member companies in the coming weeks and months.

Provincially, we're going to be collaborating with the Government of Alberta on some of the items I listed, with a focus on removing regulatory red tape that is adding unnecessary costs and burdens to business owners as they try to navigate this tough time.

I thank you, again and sincerely, for inviting me to speak. I am happy to answer questions to the best of my ability.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Scott.

We'll turn now to the Canadian Association of Petroleum Producers and Ben Brunnen, who is vice-president for oil sands and fiscal and economic policy.

Go ahead, Mr. Brunnen.

[Ben Brunnen, Vice-President, Oil Sands, Fiscal and Economic Policy, Canadian Association of Petroleum Producers]

Thank you, members of the committee and Mr. Chair, for having me here today. I sincerely hope that you and your families are safe and healthy these days.

I am the lead on fiscal and economic policy and oil sands at the Canadian Association of Petroleum Producers, representing the upstream oil and gas industry in Canada.

Circumstances beyond our control have created an unprecedented situation for Canadians. The COVID crisis and a global oil price war have combined to hurt our national economy, and Canadians from coast to coast watch as more jobs disappear and businesses close their doors. Canada's oil and natural gas sector has been particularly hard hit.

On behalf of CAPP and our member companies, we would like to thank the government for the bold actions it has taken to date during this crisis. However, there is an urgent need for additional measures for the oil and gas industry to provide liquidity and preserve jobs across the country, both during the crisis and as we forge a path ahead toward what could be a long and protracted recovery.

In January of this year, CAPP released its 2020 capital forecast, which showed an increase in spending in both oil sands and conventional areas, something the industry has not seen since 2014. However, as of April, Canadian producers have cut approximately $7.3 billion in capital expenditures, approximately a 30% reduction, and 550 million barrels per day have been shut in.

Our industry has lost approximately $150 billion in market value since March. Globally, demand has fallen by nearly 30 million barrels per day, and as much as 20% of the world's oil production needs to be shut in. Canadian storage could reach capacity in a matter of weeks.

As it currently stands, an additional 30,000 to 40,000 oil and gas jobs will likely be lost by the end of 2021 if we do nothing, which is equivalent to approximately a 15% to 25% reduction in our sector's workforce.

Ontario's manufacturing and services sector is a key contributor to western Canada's oil and gas supply chain. From 2015 to 2017 alone, we saw investment decrease in those businesses by about 45%, from $3.4 billion to $1.9 billion. The number of Ontario businesses supplying the sector fell from about 2,000 down to about 1,500 over that period. The current crisis has seen, and will continue to see, these Ontario suppliers feeling much of the downturn in our sector.

The federal government's recent announcement for the industry is a welcome start. Funds to support closure and reclamation of orphan and inactive wells will enable companies to continue to employ Canadians and preserve jobs while strengthening balance sheets, yet the liquidity crisis looms large as companies fight to stay afloat. Currently, federal liquidity support will assist some smaller companies, but many others are left wondering if additional help will come in time to maintain operations.

We estimate the aggregate liquidity needs of our industry to be approximately $27 billion to $30 billion, and we see an opportunity for the government to work collaboratively with our sector to help anchor the Canadian economy through the crisis and lead the economic recovery for the country.

To that end, CAPP recommends that the government provide additional credit to industry, with a specific focus on larger-cap firms. The measures announced to date fall short of the broader needs of the sector, notably the needs of the mid- and large-cap companies and those that do not utilize reserve-based borrowing.

Second, we recommend tax reforms to enhance industry cash flow and encourage investment. As an example, unprofitable oil and gas companies have accumulated a significant tax pool balance, and there is an opportunity to explore purchasing portions of these pools. Even at discounted valuations, this approach would inject immediate liquidity while simultaneously enhancing government revenue streams in the future.

As well, funds could be earmarked for reducing asset retirement obligations of companies to reduce environmental liabilities and strengthen balance sheets.

For taxable companies, the rapid amortization of capital is the best fiscal lever available to promote investment, growth and the commercialization of new technology. We recommend introducing 100% immediate deductibility of capital costs and eliminating the available-for-use rule to encourage counter-cyclical investment in long-cycle projects. This will notably have an impact in Atlantic Canada and the oil sands.

Finally, we recommend reforming the Canadian tax dispute resolution process to relax requirements to pre-fund amounts of tax in dispute. This is an inefficient use of capital, and it would free up liquidity for companies to invest and create jobs.

Amid all of this, Canada's oil and natural gas sector continues to provide an essential service across the country, maintaining critical infrastructure and safely and reliably providing the energy that we need.

Nearly 500,000 people work in this industry. We need support from the federal government to ensure the industry's survival so that we can continue to be there with Canadians in the future.

Thank you for this opportunity to present to you today. I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much for that presentation.

Now we will go to the Canadian Construction Association and Mary Van Buren, president.

[Mary Van Buren, President, Canadian Construction Association]

Thank you very much for having me today. I really appreciate it.

As you said, I’m president of the Canadian Construction Association. I’m here today to represent our 20,000 member firms from across Canada. These are general, trade and civil contractors and suppliers and other professionals working in, or with, Canada’s institutional, commercial and industrial construction industry.

On behalf of our members, thank you so much. We do appreciate all the steps that have been taken to date by Parliament to help Canadians and businesses in this crisis.

Since the pandemic hit Canada, the industry has really come together to do its part to protect its workers, their families and their communities. Safety has been and remains our number one priority.

We developed a national health protocol in collaboration with our members, PSPC and Health Canada, and we have created links and resources on our website to promote the provincial standardized health and safety protocols to help minimize the spread of coronavirus so that work could be continued safely. These stringent protocols have been put in place by our members from across Canada, and at times these practices were changing daily. We're very proud of our role as essential service providers.

At the same time, our local companies and associations have also been supporting their communities and health care workers with donations of PPE, free hot lunches, funding for urgent care clinics, food drives—you name it. We're very proud of the work that they're doing for their communities.

This culture around caring for our communities and giving back is based on the foundation of the small and medium-sized family-run businesses that make up 70% of our industry. It is these businesses that are still struggling, despite some of the emergency measures implemented by the federal government. Not only are there unbudgeted costs for sanitation and leasing equipment over a longer period of time, but there are also significant productivity costs as firms implement physical distancing. There are staffing shortages, and of course extra time is spent in cleaning.

The industry is eager to step up and support the federal government in its efforts, but for this we do need these firms in the supply chain to survive. This means that our firms need access to working capital now and during the recovery phase. That is why we've asked for, and are urgently seeking, cost relief on current federal projects, in the form of an emergency COVID-19 cost reimbursement program. They need this support now, not at the end of the projects, which could take months or even years to settle.

CCA is recommending that these eligible costs be reimbursed by up to 5% of the contract value as a starting point, subject to the program being adjusted as the duration and full impact of COVID-19 becomes clearer over time. We believe that extensions of time and fair compensation for reasonable costs incurred for federal construction projects, supported by sufficient documentation from the contractor, would alleviate some of the financial pressure on construction businesses.

We have briefed you in the past on issues of payment in the chain and we thank you for your support on prompt payment. You are aware of the timelines from when a project has started to when the general trades and subtrades get paid, and as you know, this can take several months. When we combine the slowdown that started in March with the increased costs, the balance sheets of the mom-and-pop firms are likely not to be in good shape come August and September. They may not be able to afford to complete the projects they've already committed to and also have the working capital necessary to finance the start-up of new projects. They cannot incur further delays of payment due to potential litigation because of contract issues related to COVID-19. This access to working capital now and as we move to recovery must be considered with any stimulus spending on infrastructure.

Speaking to the recovery phase, we are starting to see glimmers of hope in flattening the curve, and this is certainly thanks to the leadership of all levels of government and to Canadians.

As you know, the industry employs 1.5 million Canadians and contributes about 7% of Canada's GDP. Investing in infrastructure is a proven economic recovery tool that also yields social benefits, creates jobs, provides training for apprentices and helps to build and maintain important public services. There are hundreds of critical projects that are already in progress or need to be maintained. Many of these are essential to the well-being of our citizens and support the delivery of essential services like water, energy, transportation and health care. Again, it's the smaller firms—the manufacturers, the suppliers, the trades—that finance the materials, fabrication and labour as projects ramp up.

Moving into recovery, we believe that extended federal government backstopping may be required over a longer period of time.

In any economic stimulus, we believe some principles should be followed hand in hand with any liquidity support. One is that federal departments need to continue to work together with provinces and municipalities to eliminate red tape and make the project money flow as quickly as possible to get people back to work. Another is to look for balance across sectors and across the regions of Canada, as well as in the size of firms, so that we don't have just one or two $5-billion projects but instead projects for people to participate in at all levels over an 18-month period. Another is to have clear and consistent rules for COVID-19 and for access to PPE that does not detract from front-line workers. Finally, as I said, we need flexibility in dealing with COVID-19 federal project costs and delays and the kinds of projects that would qualify under the investing in Canada plan.

A cost reimbursement program for the current federal programs today, combined with a well-considered recovery plan for the future, will ensure the construction industry can play its full role in supporting a strong economic recovery. It will allow us to absorb some of the displaced workers from other industries, get them to work and provide well-paying jobs for millions of Canadians already in the industry.

An investment in infrastructure is an investment in Canada and our communities, and we're willing and able to partner with the government.

Thank you for the opportunity to address the committee on these important issues. I would be happy to answer any further questions on behalf of the Canadian Construction Association.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mary.

Turning to the Canadian Manufacturers & Exporters, we have Mathew Wilson, senior vice-president.

Go ahead, Mathew.

[Mathew Wilson, Senior Vice-President, Policy and Government Relations, Canadian Manufacturers & Exporters]

Good afternoon, and thank you, Mr. Chair.

Thank you for inviting me to participate in today's discussion. It is my pleasure to be here on behalf of Canada's 90,000 manufacturers and exporters and our association's 2,500 direct members to discuss COVID-19 in Canada's manufacturing sector.

CME's membership covers all sizes of companies from all regions of the country and covers all industrial sectors. In the early days of this crisis, we've been working with our members and the government to increase the manufacture and supply of critical PPE and health care technologies needed in the response.

We have also been educating and informing manufacturers on the latest developments in the crisis, including how to access government support and how to protect their employees and supply chains. We have been working hard to understand the impact on our sector and advocating policy, regulatory and program supports for our sector from all levels of government.

Throughout this crisis, the role and importance of Canada's manufacturing sector has never been clearer or as much discussed. Hundreds if not thousands of manufacturers have switched their production to support making critical PPE, such as masks, ventilators, face shields and gowns. Others are aggressively working on developing better tests and vaccines for COVID-19. Making things matters again to Canadians.

The government's response to date has been nearly exactly what we had requested to support the sector, and we want to thank them once again. Actions like the CEWS wage subsidy, tax payment deferrals and expanded credit facilities were designed to keep cash in the hands of companies so that they could keep Canadians on their payrolls, and it has worked for our sector. While manufacturing output has dropped substantially over the first weeks of this crisis, employment levels have remained fairly stable across the country. Global supply chains, while decreased in volumes, have held up, allowing critical inputs to be delivered to Canadian plants to keep them operating, and exports of most products have continued throughout.

Some sectors have seen increased activity in the short term, especially those in food and household products, but many other sectors have been very hard hit, especially those in the auto, aerospace and energy-related fields.

While the sector has performed well compared with many other areas of the economy, there are major concerns. Based on the best data we have right now, we are anticipating an overall decline in manufacturing activity in Canada at around 13% for this calendar year. Over the next few months, it could get even worse for the sector, since much of the output being produced through the crisis has been based on sales through last fall and winter. New sales have slowed considerably in recent weeks, meaning that while other parts of the economy are looking to rebound, manufacturing could be hitting its low point. It will take until much later in this year for a real recovery to set in, and it will likely be the second half of 2022 before we see a return to pre-recessionary production levels for manufacturers.

With this in mind, Canada's economic plan must not stop in June. It must be a multi-year and multi-faceted approach, and it must focus on recovery and growth.

CME recommends the following approach.

First, fix outstanding gaps in business support programs and ensure their stability for the foreseeable future. The gaps include the essential need for liquidity support for larger companies, which have no support at all for equipment financing, and wage subsidy programs for companies that sell to parent companies. These companies are currently disqualified from those programs. We also need rent supports for manufacturers and larger businesses that are equally suffering.

In addition, when disagreements on qualifications occur, there should be a fast arbitration program established to help companies and the government navigate their way through the disagreement.

Many of the programs are also likely going to need to operate into late summer and the fall, especially the CEWS wage program, and the government must be open to those extensions.

Second, a program that supports consumer spending should be introduced. Without consumers buying products, manufacturers don't operate. As in the great recession a decade ago, the government must look at a range of options to encourage consumer spending, leading to spending and activities in other parts of the economy, including manufacturing.

Third, we must and should promote and celebrate “made in Canada”. Canada should launch a made-in-Canada initiative that celebrates the products that are made here for sale both at home and abroad. There should be a national registry of Canadian-made products so that consumers can easily identify them, and labelling rules should be modernized and simplified. This should be launched, most appropriately, on Canada Day, July 1.

Fourth is to focus on business investment. Business investment has been dropping in Canada, to the point where we rank among the lowest in the entire OECD. Investment is critical to have a strong, flexible and innovative manufacturing sector that can respond to any crisis as it emerges. Direct incentives such as an investment tax credit should be put in place to spur investment in new technologies that improve productivity, flexibility and environmental performance. Existing programs such as the strategic innovation fund and the SR and ED tax credit program should be reviewed and modernized, along with the overall tax system. These programs, at the federal and provincial levels, should be excluded from taxation.

Fifth, we need to create a world-class business and regulatory environment. Industry is fully supportive of a regulatory environment that sets high standards, but they must also be aligned with our major trading partners, they must be based on science and they must be aimed at the right objectives.

Measures like banning all single-use plastics or labelling zinc, copper and plastic, for example, as toxic—all of which are essential elements for many manufactured products used during this crisis—will directly impact investment and need to be re-examined.

Finally, we need to leverage government procurement. Government investment and infrastructure is an obvious step, though we must look at trade and business infrastructure as much as societal infrastructure. The government should also better leverage health care procurement by creating an organization equivalent to the to the U.S. DARPA for Canadian health care innovations.

Most importantly, it's time for Canada to get serious about our industrial future. Throughout this crisis, there have been repeated comments from all parties and governments on what we need for modern industrial strategies. CME wholeheartedly agrees, and we look forward to working with governments on implementing a plan for the future of our critical sector.

Thank you again for having me. I look forward to the discussion.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mathew.

Turning to the Fédération des travailleurs et travailleuses du Québec, we have Denis Bolduc.

Go ahead, Denis.

[Denis Bolduc, General Secretary, Fédération des travailleurs et travailleuses du Québec]

Mr. Chair, thank you for the invitation and for this opportunity to speak to your committee today.

The Fédération des travailleurs et travailleuses du Québec, or FTQ, represents 600,000 people in Quebec.

These are extraordinary circumstances, and the federal government's response was just as extraordinary, in light of the financial commitment made by the government. Although we ultimately got off to a slow start, the scope of the measures announced is quite significant.

The health crisis has been a compelling example of the key role the state has in not only protecting, but also developing and coordinating any collective action.

We've been hearing much about the dedication and skill of health care workers since the beginning of the health crisis, but we cannot forget that the public servants working on developing and implementing the measures are a major force, and their skills and ability to mobilize are critical assets. This will continue to be important as we emerge from the crisis.

I repeat: both the private sector and the public sector must be involved in the recovery. Our country's recovery will require a government that implements meaningful public policy and measures that are up to the task. We must avoid the temptation to lower taxes in order to stimulate the economy.

We are in the early stages of reopening. We are looking at the short term, but the recovery will happen in the medium and long term. The country will need a lot of things. It will, for example, need the government to fast-track infrastructure projects for public transit and active transportation by improving and fast-tracking support for measures that affect transit companies. Just as importantly, the government will have to invest massively and quickly in developing active transportation infrastructure. I should point out that investments in public transit create three times as many jobs and economic spinoffs than investments in the road system. That's why we think it's important to focus on mobility when investing in infrastructure.

The government should also fast-track investments to maintain existing roads instead of expanding them. In Quebec, the consensus is that new investments in the road system should be focused on maintenance and not increased capacity.

The government will also have to implement an intermodal freight strategy focused on reducing deadheading, optimizing routes and transitioning to rail and maritime transportation.

We want a strong economy. We think that the recovery is a great opportunity to move forward with a fairer transition in response to climate change and technological advances, such as robotics, automatization and artificial intelligence.

I also want to talk about employment insurance, since the COVID-19 pandemic crisis has shown the limits of this complex program. It is a massive bureaucratic and administrative machine that is judicialized and is becoming increasingly automated. From the first week of isolation, it became clear that the administrative machine had grinded to a halt and could not meet the increased number of applications. We spoke about this quickly, but nearly three million applications were made at once.

The massive number of newly unemployed workers forced the federal government to implement simplified, temporary administrative measures in order to quickly issue emergency benefits to people who had lost their jobs as a result of the COVID-19 health crisis.

When the Canada emergency response benefit, or CERB, expires, workers who cannot return to their jobs will have to rely on EI to for an income. The threat of a second wave makes the regime vulnerable.

We welcome eliminating red tape associated with EI and overall improvements to the regime. There is no denying that this system has become a necessity. I want to reiterate that the FTQ is willing to work with the government to develop a faster and simpler appeal process that is better suited to claimants' needs. Processing measures also need to be streamlined and be made faster and more efficient.

I'll conclude with a few words about culture and the media. This sector will need special attention. Every week we hear about media outlets closing and disappearing across the country.

The tourism, hotel and restaurant industries are also seriously affected. These sectors have been hit hard—extremely hard—much like the culture and media industries. These sectors are expected to suffer the effects for longer, compared to many other sectors. These industries will need special attention and exceptional support from the government to get back on their feet.

I'm happy to take your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Denis. It's much appreciated.

We'll turn now to the United Steelworkers, with Ken Neumann, the national director for Canada.

Go ahead, Ken.

[Ken Neumann, National Director for Canada, National Office, United Steelworkers]

Thank you, Mr. Chair.

I want to thank the committee for the invitation to speak with you today on behalf of our 225,000 members across Canada. No one is untouched by this global pandemic, and the steelworker members are no different. Our union’s members work in every sector of the economy, from front-line health care workers to industrial and manufacturing workers, miners, security guards and university workers. Each of these sectors has been affected in different ways, from mass layoffs for some to a desperate scramble for necessary PPE for our members on the front lines.

If the committee is aiming to determine how well our federal government has done to help all Canadians cope with this pandemic, I can say the government is off to a good start, but more needs to be done. Governments must apply basic principles of fairness to ensure that Canadian workers are supported through this crisis and beyond.

First, we need to work with employers to save and create jobs, but the focus should be on the lives of individual Canadian workers and their families. We may all be in this together, but we are not in it equally.

Second, temporary fixes must be changed into longer-term reforms, such as income supports to supplement EI, dramatic reforms to elder care, universal public pharmacare and universal public child care.

Let’s look first at the Canada emergency response benefit, CERB. In our view, it is still the case that too many Canadians are excluded, including the long-term unemployed, those who were forced to resign from their job because of COVID and those who do not meet the income threshold. If this crisis drags on, as it appears it will, support measures will need to remain in place. No one should be allowed to fall through the cracks.

Many steelworker members have bargained supplemental unemployment benefits, SUBs. Indeed, the government has encouraged us to negotiate such benefits, and it is unacceptable that the CERB does not have specific regulations to permit the payment of SUBs during this crisis. We strongly recommend a clarification of the rules to allow SUB payments without penalty under the CERB. During this crisis, workers must be able to maintain their income. The SUB is important for this part of the equation.

The federal government must also put pressure on provinces not to cut social assistance as a result of CERB payments. We can’t have a situation where one level of government gives while another level takes away.

The emergency economic response also has exposed a need for long-term reforms to EI. Specifically, major changes to the current EI program must include a reduced hours threshold and a higher replacement rate, with both of these applicable to parental and maternity leave provisions, extending eligibility to migrant workers and making expanded work-sharing a permanent feature.

We were pleased when the government announced the Canada emergency wage subsidy, CEWS, which our union has advocated for from the outset of the pandemic. However, in enforcement, the government must strengthen CEWS provisions to prevent wage suppression. Employers should be required to top up the additional 25% of wages not covered by the wage subsidy and adhere to collective agreements where they exist. There must be monitoring to ensure that CEWS money is fully applied to workers’ wages. Finally, this program must not be used for stock buybacks or increases to executive compensation, and employers should be required to ensure that pensions are protected. Furthermore, for employers to be eligible for CEWS, they must demonstrate they are not taking advantage of tax havens, and must promise to create and preserve jobs in Canada, rather than outsourcing or offshoring.

I also want to speak on behalf of the essential front-line workers, our members who are continuing to work during this pandemic, whether in long-term care facilities, or as truck drivers and airport security workers or in manufacturing or mining. We continue to see a desperate shortage of personal protective equipment. No one should have to choose between their job and their health. Yet, many Canadians are going to work afraid for their health and that of their families.

Since this pandemic began, we have had to struggle every day with employers and governments to try to get PPE for our members. For essential workers, this government needs to ensure funds for personal protection equipment, without reservation. Anyone who must work must be protected, full stop.

Let me conclude by highlighting two longer-term priorities that have been exposed by this pandemic.

First, the failure to ensure adequate levels of care and working conditions in the long-term care sector is unacceptable. It is clear that we have failed our elders by not valuing the work of those who are essential to the dignity and care of frail Canadians. It is our national shame that these workers are underpaid and forced to work in environments that are not designed for social distancing or even privacy. The Government of Canada must provide leadership now to ensure that such tragedies never happen again.

Second, the pandemic has revealed the need for a new industrial strategy to create manufacturing jobs in Canada. For decades, manufacturing policy has largely consisted of signing as many free trade agreements as possible to secure markets for Canadian goods, while at the same time looking to import the cheapest products available and outsourcing supply chains. Not only has this left us unable to manufacture critical medical supplies during the pandemic, but it has left us with a weakened domestic manufacturing base.

It is time to put a long-term industrial job-creation strategy back on the domestic agenda, and there is much work to be done.

I will end my remarks here. I would be happy to answer any questions you may have.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ken, for those remarks.

Before I turn to the last witness, I'll give members the speaking order for the first six-minute round. First up is Mr. Cumming, then Mr. Fraser, Mr. Ste-Marie and Mr. Julian.

We'll turn, then, to the Winnipeg Chamber of Commerce, with Loren Remillard, president and CEO.

Go ahead, please

[Loren Remillard, President and Chief Executive Officer, Winnipeg Chamber of Commerce]

Good afternoon, Mr. Chair and members of the standing committee.

My name is Loren Remillard, and I'm president and CEO of the Winnipeg Chamber of Commerce.

The Winnipeg Chamber of Commerce was founded in 1873 with a clear purpose to foster an environment in which Winnipeg business and our community at large can prosper. Today, the chamber is the largest business voice in our community, representing greater than 2,000 member organizations. Our members come from all sizes and sectors, including charities, non-profits, social enterprise and, of course, the private sector. Given this fact, my comments today will be more general in scope but will touch upon the construction and manufacturing sectors, both of which are key drivers of Manitoba's economy.

A path to prosperity inevitably includes plans to adjust for adversity. As such, businesses, governments and individuals often have emergency preparedness or continency plans, yet the COVID pandemic was such that preparing a game plan to deal with what has transpired and is transpiring worldwide was a near impossibility. Hindsight is 20/20, and I'm sure there will be much written about lessons learned for future preparedness.

As the pandemic wave washed upon Canada's shores, the federal government moved responsibly to protect and support our health and our economy. On support to the business community, the federal government's response can best be characterized as ready, shoot, aim. Now, that's not a criticism. Remarkably, while the government may not have scored in every attempt, it did hit the net nine out of 10 times.

As a chamber, one of our principal asks of any government is to be open-minded and receptive to our advice and guidance. With COVID, the federal government has been more than receptive to business advice; it has proactively sought it out and embraced it. While the government is deserving of recognition for its efforts, so too is it of two constructive criticisms.

First, the announcement of a program and then a delay, days and sometimes weeks until details were released, caused much confusion and difficulties for business needing to make decisions. Perfect is the enemy of good, but program details needed to be delivered much more quickly than was the case.

Second, the lag between the program details and the opening of applications was highly challenging for business, in particular regarding the Canada emergency wage subsidy. The lag was such that many were forced to lay off staff. That would not have been the case with a shorter time frame from announcement to application.

Specific to the construction sector, the wage subsidy will cease just around the time that many in the sector—notably in Manitoba, our residential home builders—would be looking to ramp up. Using city of Winnipeg data and extrapolating it to all of Manitoba, the construction sector in Manitoba has already seen a reduction in activity of $86 million since March. If similar trends continue for May and June, the impact will be over $230 million by July.

Staying with the lag theme, many of the programs announced to date rightly deal with here-and-now pressures; however, for manufacturers, pre-COVID orders may have helped them manage through the past few months. The impact of COVID for many, though, will be felt not now but when production of pre-COVID orders gives way to non-existent March to June orders.

Also, recognize that each sector's subsectors are seeing different impacts. If you're a manufacturer of PPE or wayfinding signage, you're currently at maximum capacity. If you manufacture and maintain aerospace parts, dark skies are ahead. In Winnipeg, home of Canada's third largest aerospace sector, we've just learned that one of our largest plants will bear the bulk of the company's Canadian workforce reductions. Yet, within our garment, printer supply and craft brewing industries, many have pivoted to meet the PPE and sanitizer needs of our entire country. A sector lens on the Canada emergency wage subsidy and other programs would have been beneficial to stagger the start of the program to coincide with sector and subsector timelines.

One additional comment of importance to construction is the need for greater flexibility within existing federal infrastructure programming. We are told that Manitoba has more than $6 billion in program submissions for the investing in Canada infrastructure program, with many being shovel-ready. We urge the federal government to make the most of the current market conditions of competitive bid prices and extraordinarily low interest rates. To do so, the federal government must accelerate the ICIP approval process and enhance program flexibility.

In conclusion, the federal government is to be commended for its response to this crisis. Few in the world were around for the 1918 Spanish flu; thus, we were without the benefit of experience in charting a course.

While I hope that no future generations must endure that which we face today, I can say that the federal government's response will be a strong foundation for future pandemic preparedness.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thanks very much, all of you, for your presentations, the suggestions in your presentations and the constructive criticism. That's where we're at, and I think we are making progress.

We'll go to a six-minute round first.

Mr. Cumming.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, Mr. Chair, and thank you to all of our witnesses for taking the time and being with us today.

I want to start my first questions with Mr. Brunnen and CAPP. We've heard from the Governor of the Bank of Canada that, early on in this crisis, the bank moved fairly quickly and started buying bonds and supporting the banking industry through that bond buy and actually into corporate bonds as well.

With that, we heard that it was to create greater liquidity. It allowed businesses to expand their lines of credit, cap up their lines of credit and park the money, as he explained. I'd like to hear a bit from your members about this liquidity issue, because it strikes me that this strategy has not helped the oil sector whatsoever.

Can you comment on that?

[Ben Brunnen]

We were appreciative of the Bank of Canada's efforts. We're appreciative of their interest rate policy and we're appreciative of their liquidity. The federal government moved quite quickly, which we were pleased to see, in terms of unleashing the tools that were deployed in 2008 and 2009, which was encouraging. I think we've seen some of that liquidity reflected in terms of the banks' balance sheets, if you will, and their willingness to extend liquidity in some instances.

In terms of the oil and gas industry, there's a need for a little more of a focused approach. One piece that was quite helpful from a focused perspective was on April 17, when the federal government announced support for Export Development Canada and the Business Development Bank of Canada to provide liquidity for companies.

Within that, there was support for a subset of oil and gas companies that helps with respect to the way that banks lend to them, notably in the reserve-based lending side of things. While the details have yet to be finalized on what that looks like on the ground, we expect that it probably helps somewhere between 20 to 30 companies—small companies, largely—maintain lines of credit so they can borrow against what's a decreased valuation for their companies.

What we haven't seen yet is extended credit for some of the mid-size to larger companies that don't use a reserve-based approach, somewhere between 75,000 and above barrels per day. While not all of them need this, because certainly some of the larger companies have had the banks extend some of their liquidity facilities, some still do need it, and that's where the gap remains.

Our recommendation is for the government to enable industry-specific liquidity that is targeted to that mid-size to large company focus, so that they can access those credit facilities in the event that they need them. They might not actually need them, but having access to them is absolutely critical. We don't know how long we'll be in this position. We don't know what our industry faces over the next year to two years, and having access to that credit would be very important.

Now, of course, we also recognize that we need to be looking at this as liquidity of last resort. There have to be contingencies on the funding. It just can't be that type of liquidity that companies would like to get. Limitations on dividends, limitations on share buybacks and limitations on senior compensation, those are all reasonable—

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, Mr. Brunnen. I want to move on to a couple of other questions. I'm sorry for interrupting you. They give us pretty limited time.

I want to move on to the CCA and Ms. Van Buren with the same sort of line of questioning. You've talked about working capital requirements for people in the construction industry. Again, we've heard that we've given significant support to the banks. What are you hearing from your members with that extension of credit, that extension of operating lines, to give them that working capital, as they're probably struggling on the collection of the receivables and these projects are lengthening out in time? Are they getting the support they need?

[Mary Van Buren]

I can appreciate the thinking behind the program and appreciate very much that EDC's program was extended from export only to domestic. What we're hearing on the street is that it's not really resonating with our members. The banks continue to apply their normal credit criteria, and so until such time as the banks are willing or able to take on higher risk, it doesn't change the profile very much for our members who, as we've said, are starting to see weakening balance sheets. So, if their credit scores are not great now, they are going to be worse in a few months from now. We need to be thinking about that part of it.

[James Cumming, Conservative, Edmonton Centre, AB]

Quickly, can you comment on access to PPE? I know in the construction industry that's going to become a bigger issue as we get the economy started again, get these companies back working. Is access an issue currently? What are you hearing on the ground?

[Mary Van Buren]

Yes, I echo the comments of some of the other witnesses that having a reliable, affordable source of PPE is essential to maintaining the safety of our workers and of their families and communities.

[James Cumming, Conservative, Edmonton Centre, AB]

Great. Thank you.

[The Chair, Liberal, Wayne Easter]

We will turn to Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much, Mr. Chair. I'll start with Mr. Wilson.

There was quite a bit of interesting testimony given. But one of the things that you've mentioned was the need to have a focus on Canadian-made products to encourage, essentially, a kick-start to the economic recovery. Obviously there would be benefits to Canadians buying products locally and we would perhaps have the collateral of a strengthened domestic supply chain.

I'm curious whether you have specific recommendations on what a Canadian-made strategy might look like to help domestic producers bounce back more quickly.

[Mathew Wilson]

It's a great question. To be honest with you, I haven't thought much beyond just the need for a made-in-Canada plan. The reason that I haven't mapped it out much farther is that, until there is a buy-in for that type of a plan at the bureaucratic and political level, it's a lot of wasted thought when there are a lot of other priorities going on, frankly.

But, right now in Canada the simple reality is that most products that are made in Canada can't even be labelled “Made in Canada” because of Competition Bureau rules that were put in place about 15 or 18 years ago. They were very strict and they were done specifically so companies couldn't import products, primarily from Asia, relabel them “Made in Canada” and sell them. I get why they do it, but it basically bans almost any type of product being made in Canada.

I think even looking at how we label things “Made in Canada” and what is considered made in Canada would be a good start. I don't mean you have to have 100% wholly sourced product and assembled here by only Canadian workers to be called “Made in Canada”. That's not realistic in a globalized economy like we have today. But certainly a car made in Oakville should be able to be labelled “Made in Canada”, made by Canadian workers, which it isn't today. That's the type of thing we're talking about. How could we start sticking a Maple Leaf on things, and not just for our own consumption? Our products are in demand around the world but most companies don't label them with a Maple Leaf. We need to do more of it.