Finance Committee on May 28th, 2020

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

I appreciate your candour, and I look forward to the government and the department putting forward proactive solutions to deal with that, because getting people back to work is fundamentally important.

On the BCAP, I want to circle back to my colleague Mr. Kelly's questions. He wasn't really getting any detailed answers from the minister, and I assume that someone on this call would have briefed her on this information, so I'm hoping that you have it. I know Mr. Kelly asked questions about, for example, how many loans have been funded under the BCAP through either EDC or BDC. Do you know that?

[The Chair, Liberal, Wayne Easter]

Mr. Halverson.

[Soren Halverson]

For reasons that I alluded to in an earlier answer, we're working to improve our understanding of how many loans have been extended. We will come back with better information on that. It's something that we're in active conversations with financial institutions about right now.

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

Do you have any data? Could you say what percentage of the money has been loaned out?

[Soren Halverson]

I can tell you that there's—

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

Has a single loan been advanced to a borrower under the program, even one? How's that?

[Soren Halverson]

Loans have been advanced, but the uptake was slower than initially expected. As a consequence of that, changes were actually made to the structure of the instruments. For example, with respect to the EDC guarantee, the guarantee term was extended from one year to up to five years in duration. Similarly, changes were made on the EDC co-lending facility. Those changes have been introduced. The products.... For example, the guarantee has now been in the market in its current form for about three weeks. It takes about three to four weeks for a bank to actually underwrite a credit arrangement under one of these products, so there's some lag there, and we know that some—

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

I would just say that it's very concerning that two of the major programs that are designed to help with the pandemic, the wage subsidy and the BCAP, seem to have limited uptake. I really hope your departments are working diligently on that.

Mr. Chair, if I just have one moment, I have another question.

[The Chair, Liberal, Wayne Easter]

Go ahead.

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

I want to circle back to what my colleague Mr. Poilievre was talking about: interest rates. I really think they're an existential threat to the future ability of the Government of Canada to conduct its business. When we had the Parliamentary Budget Officer on, he said that actually the increase in debt wouldn't increase the draw on the operating budget, because they were able to refinance some of their short-term debt at lower interest rates. The corollary to that would be that carrying costs would have gone down had it not been for the crisis, and carrying costs will go up as soon as interest rates go up. On a trillion-dollar debt, a one-point increase in the interest rate is $10 billion. The interest carrying costs under the 2019 budget were about $23 billion.

I just wonder if there is any planning going on or any thought going on within your department as to how to brace for the coming storm. I would just add that both the governor of the Bank of Canada and the Parliamentary Budget Officer have indicated that their opinion is that interest rates will be going up. Of course, they don't have anywhere else to go.

[The Chair, Liberal, Wayne Easter]

We're relatively over time. Is there an answer to that?

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

Yes or no would be fine.

[The Chair, Liberal, Wayne Easter]

I don't think there's a yes or no.

Mr. Halverson.

[Soren Halverson]

Can I get away with yes? There's ongoing work on debt management planning that takes place between the Bank of Canada and the Department of Finance.

[The Chair, Liberal, Wayne Easter]

Thank you.

I would say—this is partly related to Mr. Morantz's question—that with regard to the seasonal industries in P.E.I., the extension of the wage subsidy has made the difference of whether they will open and hire people or not. They were overjoyed, but they won't come online for a month or more yet, by the time they ask for the wage subsidy back.

Mr. Fragiskatos is next, and then we'll go to Mr. Cumming.

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

Thank you very much, Mr. Chair.

Thank you to the officials for their continued work.

I'm tempted, Mr. Chair, to bring up the Conservative record on debt and deficit, seeing as how some of my Conservative friends have suddenly found religion on these issues, but I won't. I think the historical record speaks for itself. The debt accumulation under Conservative governments is extremely pronounced. I'll be polite about it. It's under Conservative governments that most of our debt has been accumulated at a national level in this country. I don't want to go down that road. In the spirit of collaboration, I'll avoid the inclination to do so.

I do want to ask officials from the Department of Employment and Social Development or from the Department of Finance—or both, if they wish—a question, since we have heard concerns when it comes to spending, raised especially by Mr. Poilievre, but Mr. Morantz also raised such concerns. Has there been modelling or analysis done in either of these departments when it comes to the counterfactual of what would have happened if we had not moved down the path of introducing the wage subsidy, if we had not introduced the Canada emergency response benefit, if we had not introduced the Canada emergency business account, if we had not introduced the rental support program that we've partnered with provinces on, and the various other programs that we have moved ahead with? Is there analysis that has been done that points to what would have happened to the Canadian economy and, ultimately, to Canadian citizens if the government had not moved in the way that it did?

That's open, again, to officials from either the Department of Finance or the Department of Employment and Social Development.

[The Chair, Liberal, Wayne Easter]

Ms. McDermott.

[Alison McDermott]

In terms of your questions about modelling results, a lot of these things and the sources of uncertainty that we're experiencing are making point estimates and models difficult exercises, but absolutely there has been a very severe decline in economic activity and employment. I think there's a very broad consensus among economists of all stripes, from the Bank of Canada to rating agencies the world over, that providing support to the economy is the right thing to do right now so that the kind of programs that have been put in place are helping the economy.

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

Thank you.

Does anyone else want to offer something? I have more questions, but if there is anyone else....

[The Chair, Liberal, Wayne Easter]

I don't see anyone.

Go ahead, Peter.

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

Thanks very much, Mr. Chair.

The next question is for Ms. McDonald.

Ms. McDonald, I heard in your answer to the point that was raised about the supplementary unemployment benefit plan, SUBP.... Can you just repeat what you said? Did you say that employers who wished to top up their employees up to $1,000 could do so without impacting the CERB payment made to an employee? Is that correct?

[Suzy McDonald]

That's correct. Employers who wish to increase their employees' weekly earnings while they are unemployed have the flexibility to do that, to top up those CERB benefits outside of the SUBP, and it doesn't impact the employees' ability to draw down the CERB.

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

Right. Would that top-up be taxable, though?

[Suzy McDonald]

That is a question that is perhaps best placed for the CRA.

[The Chair, Liberal, Wayne Easter]

Does anybody from CRA have an answer on that? Is that money taxable? I would expect it is. Wouldn't it be?