Finance Committee on June 2nd, 2020

[Steven Grenier]

The Canada summer jobs decision seems to have been more of a local decision made by the member of Parliament, I think, as is usually the case. Since the announcement was made much later than the date established for submitting Canada summer jobs applications, we hadn't received a response from the public health authority regarding whether we could proceed with our activities. Members of Parliament had to make their decision and submit it to the Canadian government. Since they hadn't received a response, in some instances, they had to avoid taking any risks and withdraw funding from several camp organizations in Quebec.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

What do you think is the occupancy rate of the camps this summer, taking into account the fact that some of them won't reopen because of public health guidelines?

[Steven Grenier]

According to the figures that I have on hand, the occupancy capacity will vary from 30% to 40% of the clients that we usually see. That's very little, considering that parents will certainly need this service in the summer. At this time, 100% of summer camps in Quebec are closed, except for some camps that are running for clients with special needs and that have obtained authorization. The camp that I represent, even though it serves clients with special needs, decided to close because it's financially unviable.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Where do things stand in your efforts to access the Canada emergency wage subsidy?

[Steven Grenier]

We're still hoping for good news and confirmation. At this time, we're in contact with senior officials at the Canada Revenue Agency.

The government seems to have understood the issues and the specific realities of the camp sector. The government has offered its full support and it will apparently act quickly. We're looking forward to this news, which could really breathe new life into the day camps, or at least into the camps that will be running this summer.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Mr. Chair, do I have any time left?

[The Chair, Liberal, Wayne Easter]

Yes, you have a minute.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Okay.

If the summer camp groups won't be there this summer, what are the possibilities for next year? What percentage of your members plan to reopen next year?

[Steven Grenier]

Currently, 100% of summer camps are closed for summer 2020. Who will be there in 2021? I can't tell you. It will depend on the financial support that we receive in the coming weeks. One or two camps have already announced that they'll be closing down permanently. We're extremely concerned. Financial support will help us with the fixed costs for the coming months, summer, fall and winter, until the hoped-for resumption of operations in 2021.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

I have one last question. Operating costs must have increased substantially for the coming months because of physical distancing. I imagine that you need help with this.

[Steven Grenier]

Exactly. The ratios have doubled. We used to need one counsellor for 12 children. Now two counsellors are needed to take care of a dozen children. The human resources and operating costs of the camps have doubled. The purchase of health equipment is a new expense. We must deal with all these factors right now, and they're certainly a significant financial obstacle for our operations in summer 2020.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Thank you, Mr. Grenier.

[The Chair, Liberal, Wayne Easter]

Thank you both.

We're turning to Mr. Julian, followed by Mr. Cumming.

Peter.

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

Thanks very much, Mr. Chair.

Thanks to all our witnesses for being here. We certainly hope that your families are safe and healthy. We appreciate all of the wisdom and direction you're providing today.

I'd like to start with Mr. Bernhard. Thank you very much for being here. Thank you for raising something that I think all MPs are aware of: the total devastation of small and medium-sized media across the country. We've just seen it in my community, which has gone from four newspapers to one and a half.

Right across the country we've seen this devastation for two reasons. As you pointed out, we have the big web giants that can steal content with impunity. Also, those big web giants are being subsidized by the taxpayer. Of course, advertising that goes to the web giants is subsidized and written off on income tax.

How do we need to change things, fundamentally, going far beyond the issue of just paying for the news they use, so that the web giants, foreign companies that often pay absolutely nothing to Canada, will stop this devastation of our local news sources across the country?

[Daniel Bernhard]

Thank you very much for the question.

Before I answer, I have a very quick clarification to make. It was bugging me that my last answer could be interpreted to mean that Friends only supports increased funding for the CBC in the event that the private marketplace is not regulated, and that's not true. We advocate for both.

To answer your question, Mr. Julian, you're entirely right that taxpayers are subsidizing these companies, both through writeoffs and other activities. What we have now, and your finance committee will be particularly sensitive to this, are thousands of industries asking for help because the government had to shut down the economy for health reasons and the subsequent devastation that has arisen.

Meanwhile, there are two companies that earn almost $7 billion in Canada and pay zero taxes. They don't collect sales taxes. They put Canadian competitors out of business due to the artificial and unfair competitive advantages that are created simply by government inaction. More than that, we allow Canadian businesses to write these expenses off in contravention of section 19 of the Income Tax Act, which would suggest that foreign media expenditures not be tax deductible.

What we have here, without getting too far into the weeds, is a situation in which successive governments have decided not to act, and this has sort of crept up on them. Our first and foremost imperative is that the government sincerely declare its intention to do something about this. We have not seen that. This is not a problem that is technically challenging to solve; it requires will and courage.

When is the government going to say enough is enough? After that, we can talk about the details, and there are various options. Getting these companies to pay for the news they use is one such option Canada can pursue quickly and without direct public expense or direct public subsidy to the news industry. That's why, especially at this time, we are drawing attention to that.

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

Thank you.

You actually go further, and I think that's certainly where most Canadians are at, which is that the web giants should actually be paying taxes. They should be good citizens in this country. These massive blank cheques they've received from successive federal governments not even requiring them to pay income taxes have undermined our local media in two ways. One is that we don't have the funding to provide the supports, and also because these companies are eliminating local media sources because of their competitive advantage. It's a beautiful situation for them. They don't have to pay taxes and people who advertise with them get to write things off their taxes. It's a perfect storm for destroying Canadians' abilities to speak to each other.

You made reference to the concentration in what's left of Canadian media. We're certainly seeing a profound right-wing bias. It's ironic that the National Post and the Toronto Sun, these right-wing sources of so-called information, are also heavily subsidized by Canadian taxpayers because advertisers can write off the kinds of advertising they do in those newspapers.

What do you think is the best path moving forward to stabilize and ensure in the long term that we have a diversity of voices in the Canadian media, not just right-wing voices, and also to stop this idea that it's always the taxpayer who has to pick up the tab for these right-wing sources and there isn't a journalistic obligation for them to show fair balance?

What is your vision of what Canadian media should look like coming out of this pandemic?

[Daniel Bernhard]

I try to take a pragmatic approach. You mentioned at the beginning that these companies should be good citizens. With respect, I—

[The Clerk of the Committee, Mr. David Gagnon]

Sorry to interrupt, Mr. Chair. I hate doing this, but we're having a problem with the interpretation.

Mr. Bernhard, I don't know if it's your microphone, but the sound quality isn't good enough right now to interpret.

[The Chair, Liberal, Wayne Easter]

Go fairly slowly, Mr. Bernhard, like we did at the beginning.

Try to speak right into your mike and make sure that it's not rubbing on your coat.

[Daniel Bernhard]

I'll try this. I hope that's better.

With respect, Mr. Julian, you mentioned that these companies, the platforms, Facebook and so on, should be better citizens. Respectfully, I think that's perhaps not the right frame. Their viewpoint is irrelevant. The Government of Canada should govern the way that business takes place in Canada. We should not be dependent on their goodwill for taxation or for compliance with hate speech law, libel, defamation and other circulation of illegal content that would land anyone else in jail.

What I would submit is that if the Government of Canada wishes to live up to its name, it should try to govern Canada, especially this majorly influential and politically impactful industry where one set of players is allowed to not just pay no taxes but also incur no costs to gather the news, to verify it, to edit it, to distribute it and so on.

We often hear that people are reluctant to interfere in this market, and I understand that there is fear that this is political manipulation. Ensuring that companies are paid a fair price for the product that they produce seems to be a very politically neutral, easily actionable and feasible first step, so I'd recommend starting there.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there. We are substantially over the time.

We will turn to Mr. Cumming, who will be followed by Mr. Fragiskatos.

James.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, and thank you to all the witnesses for appearing today.

I want to direct my questions to Mr. Neveu from Precision Drilling Corporation.

I can't imagine what it's like for you and your management team to have to deal with the impact of both COVID and the price war that has taken place in oil and gas, and the layoffs you've had to do and the people who have been affected by that.

Have any of the programs that the Canadian government has introduced been impactful for you in the short term with your team here? By comparison, because you also have operations in the U.S., what has the reaction been like in the U.S. during this time of crisis?

[Kevin Neveu]

First, with respect to the Canadian programs, the Canadian wage subsidy program is helpful. It's a short-term fix. Unfortunately, we have likely in front of us not just several weeks or months of downturn, but likely quarters, or maybe even a couple more years. The wage subsidy program has been helpful in delaying some layoffs, but that might not solve the problem on a long-term structural basis.

The well reclamation program is getting moving right now and we think that's very helpful for the well-servicing segment of our business. Remember, the well-servicing segment is the part of the industry that comes in later in life in the wells, repairs wells and keeps them running, and then eventually abandons the wells. Therefore, the reclamation and abandonment program will be helpful for that segment.

However, the core drilling business is right now operating at, essentially, historic lows. People are leaving the industry. Rigs are moving to the U.S. and other markets. The damage is structural and it's long term. We are looking for help in that area. The plan that we submitted to the province to help stimulate some capital investment in the assets could be very useful. We'd really like the federal finance committee to look to Alberta and look to that, and we will see that the CAODC submits that plan to the federal government also.

Turning to the U.S., I think the wage subsidy programs in the U.S. are working in a similar fashion, but I'd comment that the capital markets in the U.S. are functioning, so the industry isn't as capital starved as we're seeing in Canada. While there is a temporary slowdown right now during this lockdown, we think things in the U.S. will likely return more quickly than in Canada.

[James Cumming, Conservative, Edmonton Centre, AB]

Kevin, we saw an exodus of capital, particularly out of the resource sector, even prior to COVID. What is it in Canadian policy that's really hurting this industry and hurting its ability to grow and to create revenue, which frankly our country so desperately needs?

[Kevin Neveu]

It's complicated. Energy production is complicated. I don't think we're in a world of simply no hydrocarbons. We're in a long-term transition.

What really happened in Canada was that oil sands came on quickly, with several large projects coming on quickly and at the same time. At the same time, long-term pipeline projects slowed down and several were stopped. Therefore, we had this surge in oil sands production, combined with anticipated pipelines not going forward and pipelines being delayed. The combination of restricted takeaway capacity and oil sands surge has left the conventional oil and gas business in a real squeeze.

The differential is effectively that the price we receive in Canada for the oil, because of these limited pipelines, is so much lower than the price the U.S. receives in the Permian Basin that the capital is being attracted to the Permian Basin well before Canada, for gas and for oil.