Finance Committee on May 5th, 2020

[National Chief Robert Bertrand]

The amount of resources allocated off reserve for this pandemic was a slap in the face, excuse the expression. When we convened our PTOs to tell them that, across Canada, CAP had received only $250,000—if you divide that by 10 PTOs, it's $25,000 per PTO—some of the chiefs were so insulted. One of the presidents said to me, “The federal government is asking me to choose which child or which elder we are going to help, and to not help the other.”

All we are saying is that, whether they be off reserve or on reserve, let's get equal help for everyone because they all need the same help. Because of this funding—I forget what the expression is—the distinctions-based approach, some indigenous people are better taken care of than the rest who are off reserve. That should not be, Mr. Julian. We're all indigenous people. We're all Canadians. We should all get the same help from this government.

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

Thank you very much, National Chief Bertrand. I appreciate your being here and I appreciate your comments.

Mr. Littler, in the past we've had discussions around the cost to retail businesses of credit card fees and banking fees. Canada doesn't provide the kind of cap that other countries do. Particularly in light of the importance of retail workers and the retail businesses across the country getting us through this pandemic, but also in the crucial recovery period afterwards, how important is it that the government exercise its tools under the Bank Act so that these excessive banking fees, credit card fees, are brought within reason, as other countries have done, to help provide that support?

Could you also comment on the importance of having the federal government broaden the criteria around the wage subsidy for retail businesses across the country, so that they can access this support?

[Karl Littler]

Let's talk first about the credit card fee. It is a challenge, and it's become a particular challenge in this environment. The reasons for that you'll probably intuit.

One is that people are tending to use cards more than they are cash. They're tending to use tap. Although we appreciate the fact that the credit card companies raised their tap limits to $250 from $100, Interac was unable to do that. The net effect is that the costs are going up significantly because credit is more costly to accept by far than debit. While contactless payment has helped in the public health environment, it has also meant that the average cost of a transaction has gone up significantly.

The second issue, of course, is that there's a great deal more online ordering relative to bricks and mortar, and there is no cash at all in online as you well know. Debit is not particularly well set up for online. It is present, but it is relatively anaemic in that space compared to the almost ubiquitous ability to use it in bricks and mortar. In consequence, tap limits are higher. If you're buying groceries for a family, $100 doesn't go very far. Obviously a $250 limit will impel people to be more likely to choose credit.

For all of those reasons we anticipate our costs spiking during this period, and a number of grocers in particular pointed that out. The net effect of that is, frankly, higher grocery prices for Canadians. It's a simple issue that it's an input cost. Certainly on that side we are concerned about it.

We feel that the voluntary commitments, frankly, have run their useful course for a variety of reasons, some of which are unrelated to COVID-19, but, no question, it's a big issue. It's not as big a challenge as rent, because for many retailers they're not putting many transactions through at all, but it certainly is a significant issue for them.

[The Chair, Liberal, Wayne Easter]

We will have to end it there. Thank you, all.

We'll go to the second round, which will be five-minute rounds. First we have Mr. Cooper and then Mr. McLeod.

Go ahead, Mr. Cooper.

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

Thank you, Mr. Chair.

I would like to direct my questions to Mr. Fogel, Mr. Roth and Ms. Seale about another policy proposal I think would help the not-for-profit sector and charities, which play such a vital role across Canada and are all the more important during this time of need.

Before I do, I just want to ask Ms. Seale about Mr. Fogel's and Mr. Roth's suggestions of increasing the charitable tax credit. For those who can give, it would provide an incentive for them to give. I presume you would also agree with that proposal.

[Andrea Seale]

Yes, I definitely would agree with that proposal. I would say it's a difficult one, as a leader of a charity, to see clearly how it would assist with the current situation. I'm sure it would increase giving and I think increasing incentives for giving is a great idea, but it's going to be hard to predict what the impact will be for charities to be able to plan or count on that for the future. It's a difficult incentive to quantify.

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

Thank you for that. You would agree it would not be unhelpful, and probably helpful.

[Andrea Seale]

Yes, absolutely.

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

Okay, that's a fair characterization.

I would like Mr. Roth, Mr. Fogel or Ms. Seale, whoever wishes, to weigh in. If all three do, go ahead. Perhaps eliminating, removing, the capital gains tax on charitable donations of private company shares and real estate is something that would be consistent with the tax rules. I saw somewhere that approximately 20% of gifts of appreciated capital property in the U.S. comes in the form of private company shares and real estate. It's something that has been talked about in Canada for some time but has never been acted on.

Do you think that would be helpful?

[Andrea Seale]

I can start by saying, yes, absolutely we would. When the changes were made to remove the limits for stocks there was a real boost seen in the stock donations to charities, which have been incredibly helpful through the years.

Yes, I definitely would be supportive of that measure.

[Doug Roth]

So would we, absolutely. It is something that I think Imagine Canada has also spoken about. I've seen some estimates where this could lead to as much as a $200-million increase in donations, so we'd be very supportive.

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

Mr. Roth, you talked a little about the government's commercial rental assistance program and the fact that it is provided when there is a fairly steep 70% revenue drop. That's a challenge for small businesses. It means that, effectively, only those small businesses that have shut their doors stand to benefit, and those that have stayed open and have seen drastic decreases will not.

In terms of looking at the not-for-profit sector, do you have any suggestions on how that could be improved to make more not-for-profit organizations eligible for what you pointed out is vital at this time for many?

[Doug Roth]

Look at it similarly to the work that was done to negotiate the wage subsidy process. I think there was a lot of good deliberation around how quickly that drop happens, how it's measured year over year, the different types of revenue sources that non-profits have and how that was calculated. I know there was a lot of good dialogue back and forth, and I think we were able to work through a lot of the issues the sector faces. If that sort of dialogue could happen, I think that's what we would love to see, because we would be very supportive of that program if it could be more accessible.

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

I know you, Mr. Roth, indicated that, for the Heart and Stroke Foundation, the wage subsidy has worked in terms of keeping employees on, but Mr. Fogel noted that it has been a challenge for others.

What do you make of his proposal of weighing or averaging revenues over a 12-month period, having regard more broadly for the not-for-profit sector? I think it's very obvious that, for many organizations, their revenue can drastically fluctuate from month to month, depending on the campaigns they undertake for fundraising purposes. You can really distort that.

[Doug Roth]

If you're asking me, I think anything that gives a broader view to assess the level of drop in more time would be beneficial. Charities are very different. I think the government is just looking to accurately assess that level of magnitude, but if someone has good months or bad months but overall they are going to take the hit, it would be ideal if that could be factored in. I think if something like that could be considered, it would make sense.

[The Chair, Liberal, Wayne Easter]

Thank you, all, on that round.

I assume, Michael, one of those proposals on charitable donations you were talking about was the Don Johnson proposal that has been before the finance committee.

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

Yes.

[The Chair, Liberal, Wayne Easter]

Thank you.

We have Mr. McLeod and then we go on to Mr. Cumming.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

Thank you to all who took the time to present today.

I want to put my question to Robert Bertrand from CAP. I used to be a member of CAP way back when I was the president of our Métis council, so I certainly can share the concern that the Government of Canada needs to ensure that indigenous supports are inclusive of all indigenous populations.

Too often federal programs are inaccessible to many of the communities, especially in my riding. They don't seem to be able to access the money that is allocated to the NIOs, the national indigenous organizations. Money going to the AFN or Métis Nation does not come to the Northwest Territories, so I was very glad to see the indigenous community support fund flow to the Northwest Territories.

It's been a long time since I've seen so many people out on the land. We have people fishing, hunting, camping and tanning moose hides. They are opening up cabins that haven't been used for years. People are going back to their traditional family hunting areas. It's really good to see, and it's the first time we've been included.

Having said that, the money that went to Dene Nation in the Northwest Territories and the money that went to Inuvialuit flowed directly, and the Métis had to go a different route. They had to apply through the urban and off-reserve stream, and the money they got was certainly not on par with what the other indigenous governments got.

I want to ask if you could speak on the importance of an inclusive federal indigenous programming design and, specifically, if you think the urban, rural and northern streams are where these programs should be adopted. That's my first question.

[National Chief Robert Bertrand]

Mr. McLeod, thank you so much for your question. I'm very happy to see that your people were able to participate in these programs.

By what you have just said, I think we have concrete evidence of why it's important that all groups be included. It is very maddening when you see certain groups benefit from the federal government's largesse, while other people do not. As I stated in my opening remarks, the distinctions-based approach used by the federal government benefits roughly half a million people, when we know according to the government's own statistics, its own numbers from StatsCan, that about a million and a half people are now living off reserve.

We're saying, what's good for the goose should also be good for the gander. There should be no distinction between indigenous people. Everybody should be considered equal, whether they're on reserve or off reserve, up north or down south. We know there are a lot of northern indigenous people who live down south. Everybody should be treated the same. That's why we are meeting with all these groups to try to get the government to change its mind.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you for that.

I have one more question. It's for the National Airlines Council of Canada.

I've been hearing a lot from the airlines in my riding. Up in the north, our carriers are the lifelines of our fly-in communities. They are our ambulances. They are the ones that bring the groceries. They are essential for the health and safety of our people and of our economy. Last month the government provided the three territories with $17.3 million in support for the northern carriers, which is a very good first step. However, we know that we're going to need more. I know those carriers are not members of your council, but at the same time, many northerners also depend on your airlines while travelling to southern Canada.

Could you speak a little on how your member operations in northern Canada have been impacted by COVID-19, and have you any recommendations specific to these operations?

[Mike McNaney]

Thank you for the question. I'm cognizant of the time available, so I will try to be brief.

The impact has been unprecedented. I know that's an adjective that has been used a heck of a lot over the past several weeks, but it has been unprecedented when you see the capacity that has been brought down and you see the service that has been cut. I know there are a number of communities that have lost a great deal of their service. The points you're making are absolutely correct in terms of aviation being essential and a lifeblood of the community, particularly in the north.

The carriers you mentioned are not my members, so I'm obviously going to be very careful not to appear to speak on their behalf. However, whether it's large operators or small operators, the overall approach that the industry is taking is to try to make very clear to the government the unprecedented nature of what has happened, the incredible capital-intensive business that we are in and the challenges we are going to face to try to actually get back up to service. I think we need to continue to do that.

Further to some of the earlier questions I had in this committee, our expectation and hope is that the package and the approach that the government announces is going to address the needs of all carriers, regardless of size, and there will be a means by which, in terms of the specific challenges that any operator will face, it's able to actually get stabilized and continue to play the role it has to play, whether it's a northern carrier or a carrier outside my group, my association or others.

We simply have to continue to do that, and then once we actually get stabilized, there's going to be a heck of a lot of activity required to restart the sector. With so many aircraft parked on the ground and 90% of the fleet actually shut down, an awful lot of activity is going to have to occur amongst air carriers of all sizes, with government, government agencies and our airport partners.

[The Chair, Liberal, Wayne Easter]

Thank you all for that.

We'll turn to Mr. Cumming, and then on to Mr. Fragiskatos.

James, you have five minutes.

[James Cumming, Conservative, Edmonton Centre, AB]

That's great. I'll start with Mr. Davis.

Thank you to all the witnesses for coming out today.

Mr. Davis, I want to talk to you a little about the complexity of the tax system and tax returns. It was complex before, but with your small business clients, with the TOSI rules, with passive income rules, with all the different things that were added, and we now have a variety of different programs people are utilizing during this COVID crisis, what are your thoughts on how complex it is going to be for your organization to help steer people through those compliance issues?

[Peter Davis]

Thanks very much for the question. It's a great question.

I think all of us, to varying extents, who deal in the tax business or affiliates in the tax business, are getting a lot of information thrown at us very quickly. Government is making decisions on almost a daily basis and adjusting various programs accordingly. It certainly has been a challenge to get information to all our clients in a concise and quick manner, whether they're small businesses or individual tax filers.

The government should be applauded for showing some degree of flexibility when it comes to how businesses and individuals are applying for programs or seeking some type of relief when applying. I have noticed that the government has not necessarily just stuck to the written criteria. They have shown some instances of flexibility. I think if we can continue to operate in that type of flexible environment, at least for the short term until we can start to get a little more progress in getting past this crisis, then we should be in pretty good shape in the coming months.