Evidence of meeting #38 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sector.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jean-François Perrault  Chief Economist, Scotiabank
Sherry Cooper  Chief Economist, Dominion Lending Centres
Mathieu D'Anjou  Director and Deputy Chief Economist, Desjardins Group
Avery Shenfeld  Managing Director and Chief Economist, CIBC Capital Markets
Jeff Wareham  Chief Executive Officer, Catch Capital Partners Inc.
David Macdonald  Senior Economist, Canadian Centre for Policy Alternatives
Douglas Porter  Chief Economist, BMO Bank of Montreal
Catherine Cobden  President, Canadian Steel Producers Association
Gary Sands  Senior Vice-President, Small Business Coalition, Canadian Federation of Independent Grocers
Yannis Karlos  Co-Chair, Association for Mountain Parks Protection and Enjoyment
Bill Bewick  Executive Director, Fairness Alberta
Pascale St-Onge  President, Fédération nationale des communications
Sophie Prégent  President of Union des artistes, Fédération nationale des communications
Luc Perreault  Strategic Advisor, Independent Broadcast Group
John Lewis  International Vice-President and Director of Canadian Affairs, International Alliance of Theatrical Stage Employees
Arden Ryshpan  Executive Director of Canadian Actors' Equity Association, International Alliance of Theatrical Stage Employees
Lawrence Morroni  Marketing Manager, Triodetic Sales, Triodetic Ltd
Peter Chabursky  Manager, MultiPoint Foundation Division, Triodetic Ltd
Stuart Back  Co-Chair, Association for Mountain Parks Protection and Enjoyment

4:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay, thank you.

We'll go to Mr. Lawrence.

4:50 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Thank you.

I'm glad I was preceded by Mr. Julian. I will ask about the flip side of that question.

As we go through the pandemic, we've had a very difficult time. I would beg to differ a little bit on the importance of the debt. When we look at unfunded responsibilities, the debt is close to or even more than $3 trillion at 166%.

Regardless, we have high unemployment and we have low economic growth. I think one of the keys to this, and you can agree or disagree, is productivity and that, of course, of the private sector.

In order to get us out of this situation, both to pay off the debt and to get ourselves back to a higher level of employment and a higher level of growth, we need to enhance productivity. One of the drivers that government can use is to reduce taxes, not increase taxes, to allow Canadians to keep more of the money that they work so hard for, to allow job creators to create jobs and allow business owners to be successful.

Am I incorrect in that?

Maybe Mr. Shenfeld can answer.

4:50 p.m.

Managing Director and Chief Economist, CIBC Capital Markets

Avery Shenfeld

No doubt, capital spending is important. It's a determinant of long-term productivity. We have to have a competitive environment. I think that we've seen some of the challenges from jurisdictions like the U.S. that lowered corporate taxes. Canada is reasonably competitive in that regard; we're not that badly off there.

I think your fundamental question is right. Ultimately the standard of living of a country is the pie that we divide up. I'm fully sympathetic with the idea that, as we divide up that economic pie, we have to pay attention to how well the people at the bottom of the scale are doing. It's a very important feature. In fact, I think Canadians all agree on that.

Nevertheless, the size of the pie matters, too, and productivity is the key. We have a given population. Productivity is basically just the measure of how much we produce per hour or per person. That's the ultimate source of wealth in any country, so government programs and decisions that impinge on productivity are key.

I would broaden your question. It's not just about taxes. It's not that the lowest tax rate necessarily wins the day, because governments also provide infrastructure. They provide training. These are things that take tax money. It's a balancing act. The government has to have the right highways and roads to move our goods, for example. The governments have to have a good education system. They raise taxes to do that.

It is a balancing act. The full panoply of government decisions that affect output per person is really key to wealth when we think about the medium term.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

I'm sorry, Philip, we'll have to end it with one question there.

We'll have one question from Ms. Koutrakis, because we have eight people on the next panel, and we have to start on time.

Annie, please go ahead with a question.

4:55 p.m.

Liberal

Annie Koutrakis Liberal Vimy, QC

Thank you, Mr. Chair. I'll be quick.

My question is to Mr. Shenfeld, and Ms. Cooper can also chime in.

What can the government do to accelerate our economic recovery? Can you give some specific recommendations?

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Shenfeld.

4:55 p.m.

Managing Director and Chief Economist, CIBC Capital Markets

Avery Shenfeld

As I think I said in my opening remarks, the single most important thing is actually health policy, because what we're really trying to do here in terms of accelerating the recovery is to get both businesses and households comfortable with the idea that economic activity can resume without everyone getting sick.

It's about things like whether we have the right mask policy in place, for example. A major employer who we just had on one of our conference calls, a major real estate employer, had a policy that people using their bathrooms in their office towers had to have a mask. They were told by that province that masks weren't mandatory and that they basically couldn't impose them.

I think we need to have national policies designed to put us on a common footing. That's the most important thing.

One other thing that I don't read a lot about in Canada is that there is an international race not only to develop a vaccine but to get your hands on it first. I think one of the most important things we're going to do, again in the health area, is to make sure that.... It's going to be every country for themselves here, and that's not just a Donald Trump phrase. We're going to have to make sure that Canada is not waiting for the other billions of people around the world to be vaccinated while we're at the back of the line. That has nothing to do with banking, but in fact this recession has nothing to do with banking either and has everything to do with health policy.

I would add one other point. We've talked a lot about extending credit, but actually, a lot of small businesses don't want to borrow. They're in debt already. They don't want to put any more money on the debt side. If we have a hole in our financial system, I would say that it's more on the equity side. I think we need to come up with innovative ways for small and medium-sized businesses to actually have better access to pooled equity funds, because that's what they really need. They need more equity and less debt.

I would even go so far as to say that we also need to think about when they exit that and try to go public. Our public equity markets have really shrunk in terms of new issuance. We've seen that almost disappear. In the heydays of the income trusts—and I know that was a bad word in Ottawa—we had a lot of companies using that vehicle to go public, and that was a way for the owner to cash in. It may have been a flawed way in part and need rethinking, but I do think we have to think more broadly about not just big companies but smaller companies and getting more equity to them.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay.

The last quick words go to you, Ms. Cooper. You'll have to close it off.

4:55 p.m.

Chief Economist, Dominion Lending Centres

Dr. Sherry Cooper

I just want to touch on something we haven't mentioned yet, which is the sectors that government can definitely help to grease the skids of economic development. Sectors that will be very important in the growth of the next wave of technology innovation are telemedicine, which we're all engaged in right now; big data; artificial intelligence; cloud services; cybersecurity, a big government issue; and 5G. Compound that with enhanced broadband and computers for everybody and inexpensive tablets for kids. All of that is very important.

5 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay. That's an interesting note to end on.

On behalf of the committee to all our witnesses, we want to thank you for appearing today and giving us your thoughts, your constructive criticism where it was placed, too, and your advice for the future. Thank you. We wish you well over the summer months.

We will suspend for a few minutes and prepare for the next panel.

5:15 p.m.

Liberal

The Chair Liberal Wayne Easter

We will reconvene the meeting of the finance committee.

Welcome, witnesses, to meeting number 38, the second panel for today, of the House of Commons Standing Committee on Finance. We are operating under an order of reference from the House of Commons on the government's response to the COVID-19 pandemic.

Just to re-emphasize what the clerk and the folks in the interpretation booth said earlier, one difficulty with these kinds of meetings is that everything has to be translated. When the interpreters are hearing and then speaking over the top of what you're saying, the language has to come in very clearly to them, or it's really hard on the head, to put it honestly. If people could speak fairly slowly and clearly and into their mikes, that would be helpful.

We have eight witnesses on this panel, which is more than usual. I'd ask people, if they could, to keep their remarks to five minutes, or as close to it as they can, so that we have time for questions.

We'll start with the Canadian Steel Producers Association's Catherine Cobden, president.

Go ahead, Catherine. The floor is yours.

5:15 p.m.

Catherine Cobden President, Canadian Steel Producers Association

Thank you, Mr. Chair and members of the committee.

My name is Catherine Cobden. I'm the president of the Canadian Steel Producers Association.

I want to thank you very much for the opportunity to share the perspective of the domestic steel industry on the impacts of COVID and our recovery priorities.

Our member companies produce approximately 15 million tonnes of products annually, and we support 123,000 jobs in five provinces, from Saskatchewan to Quebec. Our industry is an important backbone of our national economy.

Furthermore, Canada's steel sector plays a strategically important role in the overall North American economy. We are advanced manufacturers of a 100% recyclable product and a critical supplier to many other key North American sectors.

Today, our industry, like so many others across the country, is facing unprecedented challenges as a result of this pandemic. We truly appreciate the priority that all parliamentarians have given to tackling the pandemic, and we are very grateful for many of the economic measures that the federal government has introduced in support of Canadian businesses and our employees. Some of these have been absolutely invaluable to our members.

As an essential industry, we continued to operate throughout the pandemic to supply our much-needed products to many critical applications. We are certainly proud of our small but important contribution in supplying steel for medical equipment and hospital-grade applications. However, the last few months have been exceedingly difficult for our members. We have seen a dramatic drop in demand from our primary markets, such as automotive, energy, construction and many others, and our members have only been able to operate at about 60% or less of their existing capacity.

On the job front, unfortunately 10% of our workforce has been affected by layoffs, but this is actually a good news story as these layoffs would have been far worse were it not for the Canada emergency wage subsidy program. Our members thank the government and all of you for working together to see this program delivered quickly and, frankly, for the decision to extend the program until the end of August. Our industry views it as a critical lifeline during this unprecedented time.

Moving forward, the steel industry faces a very difficult road to recovery. We are not expecting an immediate return of our business. It's not a “V”. We expect the next couple of quarters, frankly, to be a significant challenge. In that regard, we are urgently sharing with you ideas on how to recover the economy in a way that will support the steel sector's full participation in that recovery.

A top priority for us is to protect our domestic market from unfairly traded imports, either from dumping practices, massive importations or other practices that harm our sector. The world has been stockpiling steel throughout this pandemic, and we remain deeply concerned about the “wall of steel” that is already beginning to surge into our market. It's causing injury to Canadian steel producers and will cause more.

In addition, maintaining market access to the U.S. is crucial for Canada's steel sector. The swift implementation of the new CUSMA, including the automotive rules of origin, is a tremendous opportunity for North American steel and our collective recovery. The North American automotive sector is a valued customer of ours, representing about 25% to 30% of all Canadian steel production. As the auto sector returns to operation, we remain ready and able to support that sector in meeting all the “rules of origin” obligations.

COVID-19 has also taught us the value of a strong Canadian manufacturing base, along with the need for strong North American supply chains. We must carry this lesson forward as we emerge from the pandemic to ensure that manufacturing and these supply chains stay strong and resilient. For the steel industry, this includes considering how things like domestic procurement and infrastructure spending priorities could recognize the social, economic and environmental benefits of using North American steel.

Finally, another important aspect of our recovery is enabling investment that improves competitiveness and productivity, and supports environmental objectives. In today's context, Canada's steel industry is facing challenging conditions to attract investment. The strategic innovation fund has been a valuable tool for our sector in incenting investment. In our case, we saw $250 million of SIF funding leveraged to over $1 billion of project funding in the past. Given this demonstrated importance, we call for SIF's recapitalization as part of the government's COVID recovery response.

Thank you again, Mr. Chair and committee members, for the opportunity to be with you today. I'm happy to answer any questions.

5:25 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Ms. Cobden.

We'll go next to the Canadian Federation of Independent Grocers, Gary Sands.

5:25 p.m.

Gary Sands Senior Vice-President, Small Business Coalition, Canadian Federation of Independent Grocers

Good afternoon. Thank you, Mr. Chair.

I'm the senior vice-president of the Canadian Federation of Independent Grocers. I would like to thank the committee for the invitation to participate in your hearings this afternoon.

Independent grocers across Canada serve a myriad of communities in this country, particularly rural, remote and indigenous communities in which we are the only source of food for people in those areas. As such, independent grocers are a critical linchpin in ensuring food security for much of the country. Independents account for about $18 billion in sales and there are approximately 6,900 independent grocery stores across Canada.

We compete on a landscape that is overly consolidated at the retail, wholesale and supplier levels in a number of categories. At the same time, our members operate on overall margins of an average 1.5%, and that is much lower than other retail sectors. To stay on that uneven playing field, independents must differentiate themselves, and they do so by buy buying local, hiring local, supporting local initiatives and living in the communities they serve.

There is no playbook or manual that exists that could have helped guide the industry through this crisis. In the context of panic buying, labour shortages, the closing of most of the food service business, plus the increases in costs through the entire supply chain, this industry, for the most part, has responded very well by supplying groceries and supplies to Canadians.

That being said, there have been issues around the issue of supply that our members have encountered over the last few months that need to be addressed within industry and government. Independent grocers and independent wholesalers have encountered problems getting access to some products.

We understand that for some products there has been a huge spike in demand, particularly when customers want to buy enough toilet paper to last them for the next two years. However, when our members cannot access poultry, flour, eggs or other essential products, including fair access to PPE, such as hand sanitizers and face masks, then that not only impacts the ability of that independent grocer to continue to stay in business but the ability of those people, especially in more rural and remote communities, to access those essential products. The situation we've experienced has put that at risk and that is unacceptable to us. We hope it would be unacceptable to this committee as well.

Too often, over the past few months, we've had conversations with associations representing supply-managed sectors or companies in the consumer packaged goods areas, and with governments, that were taken aback when we would explain that what they were saying, in terms of supply, was not what our members were seeing. There were two different realities.

There are issues around distribution that need to be addressed and fixed. While panic buying has subsided, we could see a second wave, or at some point, some other pandemic or crisis could again arise. This means we all need to ask what we can learn from the past few months.

This industry, producers, processors and retailers, all responded with dedication and an exemplary commitment to ensuring Canadians had food and essential products. However, there is learning and things we can all do better in the event of another crisis. That includes consumers refraining from panic buying, but it also means wholesalers and suppliers have to ensure there is fair access to products for all retailers.

It also means governments have to ensure there are going to be mechanisms in place that allow our independents to access PPE supplies, both for the protection of their customers and employees. As well, all agriculture and food ministries, federal and provincial, must end their entrenched and systemic preoccupation with on-farm to the exclusion of off-farm. They are fond of slogans such as “gate to plate” or “farm to fork”, but the reality is, and it doesn't matter what party is in power, scant attention is paid to this end of the supply chain.

I would like to conclude by pointing out how the reality for all small and medium-sized businesses has changed and will change as a result of COVID-19. We know this because our members have been open as an essential service. We know what lies ahead for everybody, because we're on that road right now.

Increased costs to enhance consumer and team member safety through rigorous and stringent in-store cleaning, enhanced safety protocols, additional supplies of PPE, including installation of plexiglass barriers, are just some of our new realities. For independent grocers, because we're not part of the on-farm sector, we have received no government financial support unlike other parts of the supply chain.

As well, this committee in particular should be cognizant of the significant migration away from cash on the part of consumers to credit and contactless payments. This has meant, and will mean, a correspondingly significant erosion of the bottom line of most businesses because of the increased percentage they must now pay in interchange fees. Since large chains pay much less in interchange fees as a percentage than small and medium-sized businesses do, this erosion has a disproportionately deeper impact on those without the leverage of a Walmart to negotiate more favourable rates.

It is naive to believe that these billions of dollars siphoned out of the pockets of those SMEs do not have a huge impact on what Canadians pay for goods and services. Of course they do, but with the percentage of credit transactions now so much higher, this will make it a much more difficult journey for many businesses on their road to recovery in the next couple of years.

In the context of COVID-19, we would urge this committee to recommend that the government revisit the current agreement with the credit card companies, yet to go into effect, to reduce fees to an overall average of 1.4%. The payment landscape is much different now. All of us need to work together to put this country back on its feet, and credit card companies need to be part of that solution.

Thank you again, Mr. Chair and members of the committee, for the opportunity to speak with you today. We very much appreciate it.

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Mr. Sands.

We'll go to the Association for Mountain Parks Protection and Enjoyment, Mr. Back or Mr. Karlos.

5:30 p.m.

Yannis Karlos Co-Chair, Association for Mountain Parks Protection and Enjoyment

Thank you.

Good afternoon, Mr. Chair and members of the committee.

Thank you for providing us this opportunity to appear before you and for the important work your committee is undertaking. It's much appreciated.

We're here today to provide you with a picture of how devastating COVID-19 has been for businesses located within Canada's mountain national parks. We also have several recommendations to propose to the committee that would provide immediate relief to our businesses, as tourism and revenues plummet.

My name is Yannis Karlos. I'm the co-founder of Banff Hospitality Collective. We own and operate 11 restaurants in Banff. Joining me is Stuart Back, vice-president of operations for Pursuit's Banff Jasper collection. Together we co-chair the Association for Mountain Parks Protection and Enjoyment.

AMPPE is a member-based organization that represents over 1,000 businesses operating throughout Canada's seven mountain national parks. Collectively, we employ tens of thousands of Canadians. AMPPE advocates for accessibility and positive visitor experiences in these parks. We believe in healthy parks. Conservation is fostered when visitors experience nature in a deep and meaningful way.

As recently as last year, our region welcomed over five million people and contributed $3 billion per year to Alberta's economy. Visitors to Banff alone generate about $250 million in provincial tax and $470 million in federal tax revenues annually.

As economic diversification has become a priority in Alberta, tourism's contributions will only increase in stature. As a result, we are seeking to work with governments to do everything possible to support our industry as we navigate this difficult period.

The formerly busy streets of mountain parks towns are nearly deserted. In mid-March, over half of Banff's residents, or an estimated 5,000 people, lost their jobs, and there has been a limited recovery since. On the Victoria Day weekend, typically one of the busiest of the year, we saw an unheard of 92% drop in visitors. The local economies of Banff and Lake Louise are almost entirely reliant on tourism, with that of Jasper close behind. Nearby towns such as Canmore, Hinton, Pincher Creek, Invermere, Revelstoke and Golden also rely heavily on the mountain parks and tourism for their economic well-being.

Sadly, there's limited short-term relief in sight for our towns. A recent study by the Vanier Institute found that 72% of Canadian families are unlikely to travel in the next year. Borders remain closed. Interprovincial travel is being actively discouraged, and flight capacities are a fraction of what they once were. Sixty per cent of visitors to Banff National Park originate from outside of our regional market. Businesses in mountain parks remain squeezed between federal and provincial guidelines, and perhaps most important our business viability is built on summer visitation carrying us through the slower winter season. This was true even before the COVID-19 crisis. I heard someone say recently that losing the summer will be akin to having three winters in a row. The simple fact is that we will need sustained support to survive.

We remain solution-oriented and are deeply committed to our businesses in the mountain parks region. Our recommendations will provide immediate relief to the tourism-reliant communities where we operate.

First, we ask that Parks Canada waive entrance fees to the national parks. This was done in 2017 for Canada 150 and resulted in an increase in visitation.

Second, we recommend Parks Canada extend lease and licence renewals and overholding terms. Local businesses are scrambling to reinvent themselves as guidelines, regulations and visitor circumstances change daily. Extending lease renewals and simplifying terms will enable all parties to focus on recovery efforts.

Third, we recommend that government reinvest in guest experience and infrastructure to support communities within the parks and the welcoming back of visitors. Visitors coming to the mountain parks are seeking a connection with nature through a variety of experiences. Investing in infrastructure and addressing deferred maintenance, as well as our quantified infrastructure deficit, will give Canadians a platform to strengthen their connection to the parks while also providing important stimulus for our local economies.

Fourth, we recommend making our parks global leaders in green and low-carbon visitation by progressing plans for expanded mass transit and passenger rail connections. These projects will help reduce key congestion, lower emissions and protect the environment, while creating jobs and economic opportunity.

Finally, we ask that CEWS, CECRA and the Parks Canada rent relief program be extended for tourism and hospitality-dependent businesses as long as travel restrictions and social distancing requirements are in place. Doing this will create longer-term stability and certainty for our communities and facilitate keeping our people employed.

We would like to thank you once again for your time and attention to the very urgent issues facing our part of the country and our members. AMPPE values this opportunity not only to help you understand the devastating and long-term impacts the COVID-19 crisis is having but also to propose to you some immediate solutions that we very much hope the Government of Canada will seriously consider and act upon.

Thank you. We welcome any questions you may have.

5:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Mr. Karlos. I come from a heavy tourism area myself, and it's not easy.

We turn now to Fairness Alberta and Mr. Bill Bewick, executive director.

5:35 p.m.

Bill Bewick Executive Director, Fairness Alberta

Thank you very much for the invitation to appear. It really is an honour to be here today before the House of Commons Standing Committee on Finance.

While everyone's economies are in uncharted waters across Canada, after a five-year downturn, Alberta has been hit extra hard by the COVID-19 crash in energy demand dovetailing with a price war between Russia and OPEC. It seems to most Albertans that if it were central or eastern Canada where a critical economic sector or even a prominent company was temporarily blown into the ditch by international storms, the federal government would be right there with financial and other support.

Thus far, all we've heard coming to Alberta is about $1 billion for reclaiming orphaned wells, as well as some nationwide loan supports that are hard for our energy companies to access. For perspective on that $1 billion, Albertans paid more into the $9-billion auto sector bailout in 2009. What we've seen thus far feels a little more like a nudge into retirement than any kind of stimulus.

As our group Fairness Alberta has shown, Albertans have contributed so much to the rest of Canada, federal revenues in particular, that we believe it's both fair and also in the interest of the federal government and the national economy to give more consideration to the particular issues in our province as we struggle through the worst of this extended downturn. To raise awareness across Canada, we have a billboard right now in Ottawa, on St. Laurent Boulevard, noting that Albertans have made a net contribution of $324 billion since the year 2000.

Every time the government repeats the fact that Canada is in a fiscal position to weather this storm, I think of that $324-billion cushion provided by Albertans. This amount works out to about a $320,000 net contribution per family of four over 20 years. It's really a staggering number. For the members of Parliament who are not from Alberta, that's meant about an average $42,000 benefit to the families in your ridings.

Just for clarity, these aren't just boom-time dollars. In 2017, when we were well into this economic downturn and provincial revenues had just dropped 20%, Canada still got a net benefit of $15.2 billion from Albertans, or $15,000 per family of four.

Now, I do want to be clear. Albertans are proud and grateful for their ability to contribute to the country, just as any province would be, but I believe there are two things that have stoked discontent in Alberta that you should recognize as you consider strategies to pull Canada's economy out of this COVID-induced lethargy. The first is the many ways that federal programs, spending on goods and services, and provincial transfers all unfairly direct spending to other provinces. The second is the target that seems to be on our backs despite these contributions.

Regarding the first point, the annual $15 billion to $27 billion net contribution from Alberta has many elements that we at Fairness Alberta are diving into. Consider provincial transfers: The size of the health and social transfers mean that Albertans are contributing another $3 billion more than we get back for services that are constitutionally provincial. We just wonder if that's fair, given the equalization program adds another $20 billion on top of that, or as the Library of Parliament document that I sent you earlier today shows, the federal government spends far less on goods and services in Alberta than in any other province. We fund about $11 billion of the total, but even with two large military bases and so many indigenous communities, only $5 billion gets spent back into Alberta. Is that $6-billion difference fair?

The second point that fuels anger and discord is of course the target placed on the diverse, integrated, world-leading energy industry that has driven our large fiscal contribution. While competitors internationally innovate and drive, even amidst lower prices, our industry has faced fights over pipelines, tanker bans and GHG-related policies that create large, competitive disadvantages.

The result has been investment in jobs sent to regimes with far worse environmental or labour standards. Russia recently announced a $155-billion new oil and gas megaproject. That's almost exactly the amount that Alberta has had cancelled or postponed in the last decade. This is not progress.

To conclude, it's critical that you think long and hard about the economic impacts of the policies being considered, particularly things like the new clean fuel standards that might cripple the natural gas sector, as well as any stimulus funds and how they are directed.

I'd also ask you to use the lens of whether this is fair to Albertans. Is this unnecessarily undermining their children's chance at future prosperity when over the last two decades we've used so much of their prosperity to strengthen Canada?

We need every province operating at maximum capacity if Canada is going to recover from this COVID crisis. Please remember what Albertans operating at a high capacity has meant to this country in the past, because with your co-operation, we can help make Canada stronger than ever.

Thank you very much for your time. I look forward to your questions.

5:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Mr. Bewick.

Turning then to the Fédération nationale des communications, we have Ms. Pascale St-Onge, accompanied by Sophie Prégent.

5:40 p.m.

Pascale St-Onge President, Fédération nationale des communications

Good afternoon. Thank you, Mr. Chair, for this opportunity to speak to all committee members. I am going to give the floor to Sophie Prégent, who is my co-spokesperson and president of the Union des artistes.

June 18th, 2020 / 5:40 p.m.

Sophie Prégent President of Union des artistes, Fédération nationale des communications

Good afternoon, my name is Sophie Prégent and I am president of the Union des artistes.

The Union des artistes represents 8,500 active members. They are performers, singers, actors, hosts and dancers. I will not hide from you that the pandemic we are currently experiencing has had an impact on 100% of our members.

All performers have been affected. Some have managed to get through a little better, but very few. That is why the Canada emergency response benefit has been an extremely quick and effective remedy for the performers' realities. Thank you for that. The CERB has been extended, and it is a very good thing for our sector. However, this only brings to light the precarious situation of performers in our Canadian society, because, every time the CERB is extended, artists tell themselves that they can breathe easy for another eight weeks. One day, we really should think about looking into a more effective and lasting way to help all the artists and self-employed workers who are living in extremely precarious situations.

I sometimes hear on the radio that, in some sectors, the CERB can lead to awkward situations and have a negative effect on our society, since some workers prefer to continue to receive the good old Canada emergency response benefit rather than to return to work. I can assure you that, in the arts sector, we have no one like that. The reason is quite simple: the longer you are in lockdown the longer you are not seen, and the longer you do not work the more it works against you. When you work, you are seen, and to be seen, you have to work. There is no downside to the CERB in our profession, and people would be willing to go to work for less money than it provides.

Thank you very much for introducing the CERB. It meets a need, but one day, we will have to agree to face the facts and find a lasting solution for our artists, since that is what it is really about.

We might consider an income that could complement rather than work against the CERB. If people have some income, we could make it possible for them to have some more and still add the Canada emergency response benefit, a bit like communicating vessels. We believe that would be one viable and desirable solution.

With that, I give the floor to Ms. St-Onge, who can complete my remarks.

5:45 p.m.

President, Fédération nationale des communications

Pascale St-Onge

Thank you, Ms. Prégent.

I am president of the Fédération nationale des communications et de la culture. We represent over 6,000 people working in the media, arts, culture and event planning sector, including theatre designers and festivals.

These individuals have been hit hard by the crisis, including independent journalists, for whom the current crisis comes on top of the crisis in the media. Most media organizations have had to lay off many people, as has been the case in many other sectors. Almost all independent journalists have lost their contracts. That is why the CERB was and still is so important to them. COVID-19 comes on top of a major crisis across the entire media sector, but also the cultural sector, due to competition from the digital giants.

Here are some key facts about the self-employed. In April, 50.2% of self-employed workers experienced a decrease in hours worked, and in May, it was 42.9%. It is even worse in the cultural sector, and it is not going away anytime soon.

Our message today is first and foremost to thank the government for the speed with which it provided assistance to those we represent. We also thank them for extending that support for eight weeks.

We should start thinking now about what will happen after August 31, because in my sector the recovery will not happen right away and it will take a long time. We do not know if the audience will be there. Economic recessions are terrible for media advertising revenue.

I will stop here. Ms. Prégent and I will be happy to answer any questions you may have.

Thank you.

5:45 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much to both of you.

We'll turn to the Independent Broadcast Group, with Joel Fortune and Luc Perreault. I'm not sure who's making the presentation, but go ahead and introduce yourselves.

5:50 p.m.

Luc Perreault Strategic Advisor, Independent Broadcast Group

Thank you, Mr. Chairman.

My name is Luc Perreault. I'm the strategic adviser for Stingray, a Montreal-based company that owns and operates a portfolio of broadcasting and music-based services, including Stingray Music, available on cable and satellite and through various applications. We also own and operate over 100 radio stations across Canada. We're a global company active in 103 countries, with over 1,200 employees worldwide.

I have to switch languages now, so this requires a little bit of gymnastics.

I appear before you on behalf of the Independent Broadcast Group. With me is Joel Fortune, our association's legal counsel.

Our association represents 10 independent Canadian broadcasters operating in the television, radio and digital media sectors. We serve diverse and varied communities in all regions of Canada.

COVID has hit industries that depend on advertising very hard. We estimate that the broadcast advertising market has shrunk by 50% or more since January.

Before COVID-19, the Canadian ad market was already challenged by the growing dominance of large non-Canadian digital platforms, such as Google and Facebook, which are cutting into the broadcast ad market, much like what has happened in the newspaper industry. COVID-19 has made the situation much worse.

You also need to consider the high levels of concentration of ownership and vertical integration in our domestic market. A small number of the same companies control a large portion of broadcast revenues in all business lines via their multi-platform assets.

For example, in 2018, Canada's four largest media network companies—Bell, Rogers, Shaw and Quebecor—accounted for 73.4% of the $86.2 billion generated by media economic activity.

In the cable sector, the five largest broadcast distribution companies accounted for 88% of the sector's revenue. The same companies accounted for 91% of private Canadian conventional television revenue and 83% of total discretionary service revenue.

While independent broadcasters such as Stingray represent a smaller segment of the business overall, we're still fundamentally very important. Independent broadcasters represent fully 40% of direct employment in the Canadian broadcasting sector. We represent 69% of jobs in commercial radio, 39% in discretionary television and 14% of jobs in conventional television.

There's a multiplier effect as well. In a recent study, it was estimated that the independent sector accounts for more than 28,000 full-time positions annually in Canada through our direct operations and through our production and international distribution activities.

This is why we strongly support the extension of the Canada emergency wage subsidy. The CEWS has been critical for many independent broadcasters to maintain employment levels, especially for businesses exposed to the drop in advertising revenue.

We have also proposed additional measures also targeted to our industry.

First, we propose an enhancement of the existing tax deduction for advertising on independent Canadian broadcasters. The deduction would be increased to 130%. This would help level the playing field in an environment that heavily favours Canada's largest broadcasting groups.

Second, we support the extension of the news content tax credit developed for the print industry to the news programming produced by independent broadcasters.

Third, we support the reimbursement of the 600 MHz transition costs for independent broadcasters. These costs are being incurred to free up spectrum for other uses, including mobile use. All of Canada's largest media conglomerates also operate mobile phone businesses, so they will benefit from this transition. Independent broadcasters bear the same costs, but will not see the benefit, and they should be compensated.

We know that other initiatives have been put forward to support our industry, such as removing tax deductions for advertising purchased on foreign digital platforms such as Google and Facebook. We believe they make sense and are worthy of your consideration.

Thank you for hearing us today. We are ready to answer your questions.

5:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Mr. Perreault.

We'll go to the second-last panellist, the International Alliance of Theatrical Stage Employees. We have John Morgan Lewis, international vice-president, and Arden Ryshpan, executive director.

Go ahead.