Thank you, Mr. Chair.
It's an honour for Kim and me to address you in the House of Commons finance committee on the government's response to the COVID-19 pandemic. We appreciate the opportunity to be back and to see familiar faces despite the circumstances that we find ourselves in.
Thank you for your continued leadership. The quick response by the government has been welcomed. The steps that lie ahead are just as important as those already taken. MNP is the leading national accounting, tax and business consulting firm. As the largest professional services firm headquartered in Canada, we have a unique vantage point from which to see the challenges facing Canadians and Canadian businesses.
In our capacity as trusted advisers to 180,000 private enterprises and small business clients, and 19,000 farms from coast to coast to coast, we have seen first-hand how challenging the last two and a half months have been and the difficult road that still lies ahead of all of us.
Inspired by the concept in disaster recovery of “build back better”, we are here today to discuss tangible measures to kick-start Canada's economic recovery and get people back to work. While build back better is technically referenced in the context of critical infrastructure like bridges and dams, there is little more critical than the economic well-being and confidence of every Canadian.
Every aspect of Canadian life has been impacted by COVID-19. As Canadians begin venturing out from the last 60 days spent under public health orders, everyday actions as simple as turning a doorknob are looked at with suspicion and nervousness. According to a recent poll, over 50% of Canadians find it stressful to even leave the house.
In our submission, we outline an action plan for today and for the future. The first phase includes steps that will tackle the crisis of confidence facing Canadian businesses, while ensuring that Canadians can return to work safely and that the economic environment is one that they can trust and believe in.
Many businesses will have to retrofit their spaces to adapt to the evolving circumstances. As well, families will have to modify their homes to care for aging parents and adapt to working from home. Introducing a refundable tax credit for costs associated with commercial, industrial and residential modifications will help create safer, more efficient building infrastructure and will also stimulate consumer spending.
Families that are already saddled with significant personal debt and the reduction of available jobs have students and their parents wondering whether they can still afford post-secondary studies. We recommend that the annual tuition transfer cap be eliminated, allowing supporting parents to claim full tuition costs. This will increase access to post-secondary studies for cash-strapped families.
As our economy stabilizes, we recommend creating a temporary system modelled after the homebuyers' plan, where Canadians can access some of the funds in their RRSPs like a rainy-day fund without facing immediate and punitive tax consequences.
Governments across Canada acted quickly to help Canadians, and for that we are all grateful. From St. Patrick's Day to May long weekend we saw 300 programs, grants, deferrals, subsidies, loans and other measures announced by the federal, provincial and territorial governments with the express purpose of stabilizing the economy in the face of the public health crisis.
There are still some items to clarify with respect to the Canada emergency wage subsidy program. Take, for example, a flower shop in Ottawa that has decided to purchase a second location in Cornwall. If the Ottawa location had bought the shares of that second location, that business would be eligible for the CEWS and could retain its employees. If instead the Ottawa location decided to buy the assets of the second location, the business would not be eligible for the CEWS program.
It's important to remember that these are emergency programs. They were not designed as long-term economic recovery programs. If done in a gradual way, phasing out current emergency programs such as the CEWS and the Canada emergency response benefit will ensure Canadians can build back a robust and growing economy.
The CEWS phase-out could target businesses that are still under public health orders to remain closed or that were most severely impacted by the pandemic, or decrease the subsidy percentage from 75% over time.
We know businesses with a rainy-day fund were less reliant on the emergency programs and were able to maintain their employees with limited support. The current tax rules penalize small to medium-sized Canadian businesses for maintaining cash and investments over a certain amount. It is imperative that this limit be increased to ensure businesses can weather future challenges.
Last, there has been much written about Canadian debt loads. We are taking on more debt at the household level and across all orders of government. At MNP, we've completed a quarterly consumer debt index. Our March, 2020 study indicated that nearly half of Canadians are concerned about being close to insolvency.
It is our recommendation that future economic recovery programs consider the concerns of impending deferred debt obligations, and incentivize real economic growth and job creation. We need a strong foundation and framework for recovery.
Thank you for your important work.