Finance Committee on June 18th, 2020

[Gary Sands]

It would significantly increase prices. The cost of transporting goods is a significant one in terms of the bottom line. It would have a huge impact on our industry, particularly because many products are seasonal and there are imports.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

Mr. Karlos, do your organizations—and I have to say that Banff is among the most beautiful places in the world—receive any money from the federal government or the provincial government? If that money disappeared tomorrow, what would be the impact on the parks?

[Stuart Back, Co-Chair, Association for Mountain Parks Protection and Enjoyment]

Clearly, being a federal national park, there's certainly money that flows into the park for the infrastructure there, the park's infrastructure, but the result of that is the economic activity, that $3 billion, and $250 million in provincial taxes and $470 million in federal taxes.

I think it's important to note as well that about 40% of the business in that region, the $3 billion, comes from Alberta, from the wealth of successful [Technical difficulty—Editor]

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much for that.

To our friends with the theatre alliance and the stage employees, I have to say that I absolutely love live theatre. Thank you for all you do.

To what extent do you receive any subsidies from the federal government or the Province of Alberta, and what impact would there be if those were taken away tomorrow?

[John Lewis]

Perhaps I'll take that question. Arden, please feel free to join in.

The federal government and all provincial governments have some funding formula for most arts organizations through the Canada Council for the Arts, and there are similar provincial agencies. In addition to that, industries themselves will make direct contributions to specific art festivals and that sort of thing. I'm sure there is a significant contribution from the industry in Alberta, but I'm just not aware of that information.

[The Chair, Liberal, Wayne Easter]

Okay. We will have to move on.

Next is Ms. Koutrakis.

Annie.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair, and thank you to all our witnesses this afternoon.

My question is for Mr. Bewick.

Mr. Bewick, thank you for your presentation and for highlighting the contribution made by Albertans since 2000 by way of equalization payments and for which all Canadians are thankful. We all know that Albertans are going through an exceptionally difficult time. Our government is working hard to find solutions and to provide the help that is required during this difficult time, not only to Albertans, but to all Canadians from coast to coast to coast.

I'm curious to get your thoughts on whether you agree with the current equalization formula, which was implemented by the Harper government and in which Jason Kenney was a senior minister and, just to remind everyone, both of whom were MPs from Alberta. I'm curious to get your thoughts on that, please.

[Bill Bewick]

Sure. Just two days ago, Fairness Alberta released an analysis that had eight ways to reform equalization. I encourage everybody to have a look at fairnessalberta.ca. There are always economists and think tanks that often put out one or two flaws in a program, but I think we've put together a very comprehensive list that in three pages gives you a really good primer on the key elements of the equalization program that are problematic for some people, including the recipient provinces.

So no, we definitely think there are some significant reforms that could be made within the program. Some of them would benefit Alberta. Actually, the first four would have some impact on Alberta, and the other four wouldn't, so long as Alberta is not a recipient province. There would still be ways to make the program fairer and generate more support for the concept—it is in the Constitution—across Canada.

[Annie Koutrakis, Liberal, Vimy, QC]

In the interests of time, would you be able to walk us through...? We don't all have time to go onto the site right now.

[Bill Bewick]

Yes, sure.

[Annie Koutrakis, Liberal, Vimy, QC]

Maybe you could elaborate on just one.

[Bill Bewick]

The first problem, which I touched on a little bit in my comments, is that the health transfers and the social transfers are a $75-billion federal program which goes to provinces to cover provincial services. Because Albertans pay a higher proportion of income tax, we end up actually subsidizing that program by $3 billion. Now, that's $3 billion that goes from Alberta taxpayers, through the federal government, to other provincial governments to cover what is a provincial jurisdiction. There's a duplication of equalization, because there's also an equalization program that's meant to redistribute funds to provinces to ensure that they can provide good services. We'd like to remove that duplication.

We also think the unchecked growth on the program...$20 billion now, and it grows with GDP, regardless of how close provinces are getting. The other big point is that despite the fact that fiscal capacity has been shrinking pretty significantly over the last few years, particularly due to the energy downturn, the equalization program keeps growing. In theory we could all be within 1% of each other, but the lower half would get a full $20 billion.

One last thing to think about is that it focuses on equalizing the fiscal capacity of provinces to pay for their services, but it doesn't think about what it costs to deliver those services. We're trying to find a way to make sure everybody can deliver relatively equal services. It doesn't make any sense to ignore that it might only cost 85% as much to run a hospital or to run a service in a certain province compared with, say, Alberta or Toronto or Vancouver. We really need to think about making sure that we reflect the cost to deliver those services.

[The Chair, Liberal, Wayne Easter]

This is your last question, Annie.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you.

Mr. Sands, during this COVID-19 crisis, many Canadians have begun to increasingly rely on e-commerce platforms to meet their needs, including buying groceries online. I expect that grocery delivery will be a highly valuable service for many Canadians, in remote areas specifically, once the COVID crisis ends, and specifically for those who may have limited mobility. Do you see an opportunity here for the independent grocers to maybe offer some delivery services or some other kind of service that may be a market niche?

[Gary Sands]

Yes, for sure, and independents are already doing that. The independents are up against the chains—the Loblaws, the Walmarts, the Sobeys—and their niche is to differentiate. That's what I was talking about earlier. They hire local, support local and buy local. That's really their niche.

You bring up an interesting question that I'd love to talk to the committee more about sometime—I'm sensitive to the time today—and that's about the growth of e-commerce, which can operate everywhere and at all hours. You have to juxtapose that with the realities of businesses. This is not just independent grocers; it's also the other businesses in your riding, bricks and mortar. They're paying fees and premiums. They have to adhere to bylaws and myriad other regulatory and financial challenges that the e-commerce giants, mostly from outside of the country, don't have to deal with. It's an interesting question.

To circle back to your question, yes, that is something we're adapting to. It's like the migration away from cash. There is still a need for independent grocers to have that strong bricks and mortar presence in communities across this country.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

I don't think we've had a session where we haven't heard something about the e-commerce giants from outside the country.

Before I go to Mr. Ste-Marie, I have a question for the Canadian Steel Producers Association.

Ms. Cobden, looking ahead at recovery, how prepared are Canadian steel producers' clients to invest in Canadian facilities for long-term viability? What's necessary for the Canadian government to do to ensure that the investment becomes part of a recovery strategy?

[Catherine Cobden]

Indeed, attracting the investment needed to make that happen is tricky. It's tricky today, it was tricky yesterday and it will likely be tricky tomorrow. It's why we feel very strongly that there's a big opportunity for us to attract that investment if we work together to stimulate it. That's where our recommendation around recapitalization of the strategic innovation fund comes from. It has been a very successful fund.

There's a lot of good, strong competition for that, by the way, but in the steel industry we are happy to compete for that support. It does bring investments to our industry and to our markets. It's extremely important.

Beyond that, there are things that can stimulate our individual marketplace. We have different ideas on that too. They're not related to steel itself but to large consumers of steel.

[The Chair, Liberal, Wayne Easter]

Thank you for that.

I guess one other part of that is, if the federal government is not there for the steel industry, what happens with the international clients you would have?

[Catherine Cobden]

I think that, again, this comes back to how we attract the investment here. There's no question that our industry is competing with their international colleagues all over the world for that investment. Anything that can be done that brings Canada to the forefront of bringing these dollars to our industry for that recapitalization of our sector is critically important to us. If that doesn't happen, the investments won't come, and we will not continue our quest to be the most competitive and the most productive; so they're linked.

[The Chair, Liberal, Wayne Easter]

Thank you for that.

We'll go to one question from Mr. Ste-Marie and one question from Mr. Julian, and then we'll wrap it up.

Mr. Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Mr. Speaker, my question is for Ms. St-Onge. Ms. Prégent can add to the answer if she wishes.

As we have already said, we are satisfied up to now that the Canada emergency response benefit has been extended by eight weeks. However, we are concerned about what comes afterwards, especially for workers in the cultural sector, all the more so because, for that sector, the summer has been a washout, as has been mentioned. In addition, support measures for culture do not get to the workers easily. I am also thinking about our media, especially about the independent and regional media.

Ms. St-Onge, what does the government have to do?

[Pascale St-Onge]

The government can do a lot to help the media and culture. First, everyone is thinking about a program to support self-employed workers in a longer term, meaning a program other than the CERB, either a variation of it or a guaranteed minimum income. Now, as we know, establishing a new program can take time. So we have to make sure that, when the eight additional weeks are over at the end of August, the workers do not find themselves with no income. In fact, at the moment, they really need the CERB. It is allowing them to pay their rent, buy food and feed their families. I am really asking you all to keep that in mind. It is very important. Our people are going to need that income for a lot longer.

Specifically with regard to the media, there are also a number of measures that the government can take. I remember that, when the payroll tax credit for the print media was established, the expert panel and the Senate committee recommended that the base level of eligible payroll be raised and that the tax credit be set at 35% rather than 25%. In the current crisis, it is even more urgent to do that. I would even suggest extending it to newsrooms and the broadcasting media, which are also currently experiencing a major drop in advertising revenue.

Finally—and this goes for culture and the media alike—as the current crisis is going to give rise to a crisis in public finances, I believe that Canada no longer has the luxury to do without revenue from the tech giants, either through income tax, other taxes, or even by introducing new mechanisms. Digital should provide opportunities for culture and for the media. The giants are occupying so much space at the moment that they are preventing the growth of our media and our culture. They are threatening the very existence of our media. They must therefore contribute to our system in the same way as Canadian stakeholders do.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That is clear. Thank you.

Ms. Prégent, do you want to add anything?

[Sophie Prégent]

No, I feel that Ms. St-Onge has said what needs to be said.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.