Finance Committee on Feb. 25th, 2021

[Daniel Kelly]

I'm not sure that I understand what you mean by an equity tax credit, but the idea of some support as we move from lockdowns to ending of stay-at-home orders and advice and then into an open economy.... That transition is going to be a really delicate one and different for every sector of the economy. As was noted by my friend from Restaurants Canada, we are going to need a variety of measures.

The one I would advocate most strongly—to move us towards recovery with the pool that the Deputy Prime Minister has already suggested she's allocated for this purpose—would be to try to find some ways to relieve small business debt. The CEBA model, with the current one-third that is forgiven, could be ratcheted up. We've suggested that be expanded to a $80,000 loan that is 50% forgivable. The other is to move a forgivable component into the HASCAP loan for the highly affected sector.

If you did that, we think businesses would be helped. If equity implies perhaps government partial ownership of the business, I'm not sure that would be something we would support, but—

[Sean Fraser, Liberal, Central Nova, NS]

To be clear, that's not what I'm interested in. I'm wondering if we can make it easier for investors within communities to help invest in businesses within their communities as they transition to reopening.

I expect I'm out of time, so if you have thoughts on that, perhaps we could have a follow-up conversation.

[The Chair, Liberal, Wayne Easter]

You are out of time, but that was a very good discussion.

We are back to Ms. Abou-Dib with the Teamsters.

We'll allow you to make your presentation, and then we'll go to Mr. Ste-Marie on the question list.

[Mariam Abou-Dib, Director, Government Affairs, Teamsters Canada]

Thank you so much, Mr. Chair and members of the committee. I apologize. Like many of us, I think, I have a love-hate relationship with technology. Thankfully, it's working again, so here we go.

On behalf of the 125,000 members of Teamsters Canada, the vast majority of whom work in the transportation industry in rail, road and air, as well as a significant and important number of members who work in the hospitality, tourism, trade show and sports entertainment sectors, I would like to thank you for inviting us to present before this committee.

Allow me to begin by stating that Teamsters Canada is of the firm belief that saving lives, protecting public health and containing the coronavirus outbreak must remain the federal government’s overriding priority. In the short term, this includes continued income support for individuals unable to work due to COVID-19, as well as proper personal protective equipment, workplace health and safety precautions, training for workers, appropriate testing and, of course, vaccinations.

However, the number of workers who are currently facing the prospect of an end to their benefits in the coming weeks—yes, we just heard, thankfully, about the temporary move to extend the EI provisions—is still quite staggering. When you think of the number of workers who have been receiving the CRB, in late January that number was 844,000. There are 129,000 workers who were receiving the Canada recovery caregiving benefit in late January and, of course, there are the 2.3 million people who are currently receiving EI benefits.

Having said this, it’s clear that Canada is in the midst of an economic crisis. No one is disputing that, but this crisis has has disproportionately affected low-paid and vulnerable workers in precarious employment, especially women, young workers, newcomers, workers of colour and workers with disabilities. Federal fiscal policy measures must prioritize helping Canadians return to decent jobs. For Teamsters Canada, this especially means expanding access to training and apprenticeship opportunities.

As public health measures permit, fiscal policy measures responding to the recession and unemployment crisis will need to prioritize helping Canadians return to good jobs. Accordingly, the plan for economic recovery must be gendered and must be inclusive, inequality-reducing and sustainable.

As we know, Canada’s low-wage workers were hit the fastest and the hardest in this pandemic. They would have received little from EI even if they had qualified for benefits. Canada got it right by fixing this issue and creating programs such as the wage subsidy program for employers, as well as the CERB. As we head into this recovery, workers will need an inclusive, streamlined and simplified EI program that doesn’t disadvantage low-paid workers in non-standard employment. As government moves to reform EI, a clear timeline should be set for a broad review of the program with full public participation.

Equitable investments in critical social infrastructure are also needed to ensure that no one will be left behind in Canada’s recovery efforts. I think saying that we endorse the recommendations outlined by Angella MacEwen from CUPE is somewhat fair.

I want to stress one particular area here, which is that the pandemic proved that care work and care jobs are critical and remain vital to broad-based recovery. Therefore, we support the establishment of a coordinated plan for strengthening Canada’s care economy. This includes working with provincial and territorial governments to regulate long-term care. It should implement high standards for long-term care work, mandate high staff-to-resident ratios in order to ensure quality care, and provide caregivers with full-time jobs with benefits such as paid sick leave.

It’s no secret that not all workers, including many teamsters, will be able to go back to their pre-pandemic jobs. Many of those jobs, especially for our members in the hospitality, trade show and sports entertainment industries, for example, could be lost. More and more workers need retraining, and this means investing in training programs and mechanisms to ensure workers can access them and survive at the same time.

We believe that to enhance the ability of low-wage workers to upgrade and acquire portable skills, especially now, the new EI training support benefit should be expanded from four weeks to a minimum of 16 weeks in order to allow for acquiring certifiable and transferable credentials. Also, the replacement rate for the EI training support benefit really should be set at least at 85% of the average weekly earnings, rather than the currently proposed 55%.

The government must prioritize broad access to vocational education, training and apprenticeship opportunities for women, men and especially disadvantaged groups, including youth, lower-skilled workers, workers with disabilities, newcomers to Canada and racialized workers.

This pandemic has provided us all, but especially decision-makers, with an opportunity to pause and reflect on what is right and what is wrong with our economy, and on how to ensure that we're ready for any disasters in our future and that of our future generations.

As labour, we believe that getting Canadians back to work and fully employed in decently paid, productive work—along with public investment in infrastructure and renewal and expansion of social and public services—must be the priority. That will lead us along the path of an economic recovery that's gendered, inclusive and sustainable.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much for your presentation.

We turn now to Mr. Ste-Marie for six minutes, followed by Mr. Julian.

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

Thank you, Mr. Chair.

My best regards to all the guests.

I thank them for their very touching testimony. I especially appreciated Mr. Cassidy's testimony.

We feel that you are very knowledgeable about that specific sector. You communicate very well what you are experiencing and you are introducing solutions, which is greatly appreciated.

My questions are for Ms. van den Berg first and then Daniel Kelly.

I would like to hear your thoughts on restaurants and small businesses, which are often independent and generally owned by self-employed people. They are often family affairs. They are the soul of our downtown areas and small towns that gives colour and texture to each of those cities and communities.

[Technical difficulties] businesses or presentations have been very eloquent [technical difficulties] after the pandemic. At the pace things are moving, I really fear that, after the pandemic, perhaps in a year—a bit less or a bit more—those businesses and restaurants, which are the soul of those cities, will simply close. That concern persists despite the significant investments and major programs implemented by the government, even supposing they will be extended until the end of the pandemic.

What must be done to ensure the survival of those restaurants and businesses?

[The Chair, Liberal, Wayne Easter]

Would you like to start, Ms. van den Berg?

[Lauren van den Berg]

I would. Thank you, Mr. Chair.

Thank you for your question.

One of the key points is something I touched on. Independent operators in restaurants and small business centres across the country are really the heart and soul of local communities. They anchor local communities.

We've seen restaurant owners have no choice but to add debt to their balance sheets in order to survive and to remain open, but the amount of debt is no longer sustainable for many, if not most, and it absolutely cannot be a long-term solution for our industry. That's why we're calling for the subsidy programs to be extended through April 1, 2022, and to be tied to a baseline of 2019. As well, you'll see in our recovery plan that we're calling for a larger portion of the loan programs, like HASCAP, to be forgivable, because asking small business owners to take out debt to pay down debt to pay down debt is a vicious cycle in which, honestly, no one is going to win.

I want to touch quickly on a couple of key points here and point out that as an industry, we employ more people per dollar than any other sector. Again, when you spend $10 in a restaurant, the average establishment keeps less than 50 cents, and the rest goes back to the economy in the form of jobs, food and beverage purchases, contributions to local charities and much more.

There is also a very real taxation difference that translates into a significant return on investment for governments in exchange for supporting restaurants. Every $100 that Canadians spend on groceries generates about $1.20 in taxes. Meanwhile, that same $100 spent at a restaurant represents $13 in taxes that go back to the government, so when I talk about restaurants feeding the recovery, I'm not being facetious. It's generally our best way forward to bring back half a million jobs for women, for visible minorities and for new Canadians, and to ensure that our youth still have access to invaluable first job experiences.

[Daniel Kelly]

If we broaden the discussion to small businesses, many of the things that Lauren shared are very relevant for all the sectors. Keep in mind the sectors that have been hardest hit by the pandemic. We've talked about the groups of employees who have been hardest hit, but the sectors include restaurants and hospitality more broadly; arts and recreation businesses, which have been eviscerated by the pandemic; the retail sector, which has been desperately hard hit; and service businesses—hair salons, nail salons and others. All those businesses that rely on face-to-face or in-person contact, and often physical contact with their customers, have been really hard hit, and many of them are not going to survive this.

We are getting more stories of business owners calling us, often in tears, saying they have been a successful business for 50 years and have nothing left. They're done, and they're asking to whom they turn in the keys to their business.

As I've mentioned at committee before, an increasing number of calls from business owners to the CFIB's business help lines are turning into suicide prevention. They are that desperate, because they see their life's work, their income and often their homes, which they have remortgaged to support the business, potentially disappearing before their eyes. These are desperate times, and they add a huge amount of richness to the Canadian economy. We need them and we need them to stick around.

As committee members know, my organization opposes business subsidies, often advising you against creating subsidy programs for business, yet I have somehow become Canada's leading advocate for business subsidization right now. The reason is that these are often good, solid businesses, but they cannot survive with the requirements for physical distancing we have right now, the lockdowns or the advice to Canadians to stay home. That's why I think government needs to support them, fix the gaps in the programs and fix them quickly so Canadians have jobs to come back to when this is all over.

[The Chair, Liberal, Wayne Easter]

We are over time.

There is something that might be worth considering in that area, Dan. When we went through that situation in a farm crisis years ago, we put farm debt review boards in place, which also helped with the mental pressure. That might be worth looking at for the small business community, because you're right that when your house is on the line, it's no fun.

We will now go to Mr. Julian for six minutes and then to Mr. Falk.

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

Thanks very much, Mr. Chair.

Thanks to all our witnesses for being here today and providing their very valuable testimony. We hope you and your families continue to stay safe during this pandemic. We're now in the second wave and, tragically, anticipating a third wave coming soon.

My first questions will be for Ms. MacEwen and Ms. Abou-Dib.

I want to ask you this because you both spoke about the issue of inequality and addressing inequalities in a meaningful way. We went through the Second World War and had a crisis that was similar in many ways, being both economic and social. At the same time, we had in place wealth and excess profit taxes.

The banks this week have announced massive profits, now clearing $40 billion and going towards $50 billion, during the pandemic, and they received $750 billion of liquidity support in the same period. That happened within days. We've seen Canada's billionaires increase their wealth by over $60 billion. The web giants, the largest corporations in Canada, don't pay taxes.

How important is this issue of dealing with tax fairness? How essential is that to putting in place the other measures you're both speaking to, which help to address the growing and obscene inequality in our country?

I'll start with Ms. MacEwen.

[Angella MacEwen]

This is a question I've been thinking a lot about. I know the federal government can continue to borrow money to fund the stimulus we need right now, but eventually we'll need to increase tax fairness. The federal government will need to increase revenue. You have public sector workers at all levels who have seen this game play out before, and they're all afraid of the coming austerity. They're all worried about the eventual story we're going to hear, that we all need to tighten our belts and that governments are like households, which they aren't. A government budget is completely different from a household budget.

We should absolutely not be worried about going into deficit, but we need to think about inequality in terms of the way our tax system fosters increased inequality and changes the decisions corporations make on where they're spending their money. We've seen a bunch of corporations take money from the federal government, continue to pay out dividends and have huge share buybacks, because what they want to do right now is to boost their share prices, which boosts executive compensation. In the middle of this crisis, which is already hitting low-income workers and small businesses the hardest, our tax system is structured in such a way that the biggest and the wealthiest can leverage that and make even more money.

We need to start changing the legislation in the system so we can both improve the structures that create inequality—so that we'll reduce it—and fund the types of things Mariam and I were both talking about to create a more equal and more prosperous economy going forward.

[Mariam Abou-Dib]

Of course I agree with Angella on the points she raised. The other thing to consider is closing the loopholes that benefit mostly large corporations and the very wealthy. We're not talking here about small businesses and the local businesses that are represented here. We're talking about large corporations. These large corporations have a great ability for tax avoidance. That's something we need to really look at and consider. There have been tax cuts for large profitable corporations spanning the last 20 years, which we should really be re-examining.

Finally, we also need to look at how to generate additional revenue as we transition into a recovery, by implementing something like a wealth tax, again for the very wealthy. Restoring corporate tax rates to even 2010 levels would make a significant difference. Those are the kinds of things we should be examining when it comes to fair taxation.

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

Thank you so much.

I'm going to go back to Ms. MacEwen.

You talked very passionately about the care economy, about universal child care and about how we need public universal pharmacare. Yesterday the government rejected the only legislation before Parliament calling for public universal pharmacare. How important is it for the caring economy, Ms. MacEwen, that we put in place these universal programs that everybody can benefit from?

[Angella MacEwen]

Pharmacare is a great example, because many people lost their coverage when they lost their jobs. They couldn't afford their medicine because they didn't have money and they didn't have coverage. Universal pharmacare would make sure they were always covered, whether or not they had a job. That's called an automatic stabilizer, something that reduces the impact of recessions on individuals and companies. It makes it easier for companies, because they don't have to provide that benefit to employees. It's cheaper. Companies would save a lot of money if we could do it in the same way we do with universal medicare. It would be a group insurance type of program. That would provide cost savings to the whole system and stabilize people's income. That's also really important in terms of inequality, because it tends to be the lowest-income people who never have access to that.

[The Chair, Liberal, Wayne Easter]

We will have to move on to Mr. Falk, followed by Ms. Dzerowicz.

Mr. Falk, you have five minutes.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Mr. Mutch, you are the biggest private job creator in the province of Nova Scotia. You saw a dip in your business revenue this past year. You were able to use some of the CEWS program. I'm curious about your response to some of the discussion at this committee. I don't think you would be considered a small business. You would probably be considered one of the larger businesses or bigger corporations.

How do you feel about getting whacked with a tax increase once you return to profitability, after you've provided all of those jobs for the province and created wealth, not only for yourself but for many of your employees?

[Andrew Mutch]

Obviously, as a large employer in the province, we want to make sure we can sustain that and be here for the present. We can be, and have been, a real backbone for our province, and the sustainability of that is what's interesting to us.

At a global level, we're all aware that we compete internationally. We don't compete just within Canada. About 75% of our product is exported. In order to compete at a world level, we have to have the appropriate environment here to be viable for the long term. If we are to stay sustainable, we have to be competitive, and being competitive is paying the competitive tax rate. In order to grow—and we are always interested in looking at ways we can grown and build our operations—we have to compete with solutions all around the world.

[Ted Falk, Conservative, Provencher, MB]

I can't imagine you would eagerly anticipate a tax increase once your company has turned the bend and returned to a profitable status where you're going to be contributing to the province, to the community and also to the livelihoods of your employees. As a personal user of your on- and off-road product, I would certainly hate to see you go.

Thank you for the good work you do, and the excellent product you produce.

I would like to ask Ms. van den Berg a few questions. One of my constituents approached me this morning about what I was doing for them. They happen to own five Smitty's restaurants. I was asked what I had done for them lately. I said, “I'm going to be doing something for you this afternoon. Your industry is presenting at the finance committee. I'm going to ask them some good questions and give them an opportunity to toot their horn.”

One of the biggest problems that has been communicated to me by restaurant businesses is that the provincial lockdowns and restrictions have prevented them from running their business. Does your industry have any stats at all as to COVID transmission rates in the restaurant industry?

[Lauren van den Berg]

Thank you so much. I'm happy to help everyone's horn get a bit tooted here.

One of the really frustrating aspects of this particular apocalypse is the inconsistent application of restrictions, lockdowns, rolling restrictions and ongoing lockdowns, and how they vary from province to province and from region to region.

Dan and I have probably yelled ourselves hoarse at the Ontario government for some of the frustratingly short-sighted policies that are being implemented, because businesses need continuity. We are being told we can open and then, at the drop of a hat, we need to close for an unspecified amount of time. In Toronto alone, we've been shut down since mid-October. That's over 200 days that many businesses, mainly restaurants, have been shut down with little to no source of revenue.

[Ted Falk, Conservative, Provencher, MB]

My understanding is that the CERB has negatively impacted some of your businesses, because many of your employees are part-time. The CERB ends up paying them more than they would have received had they taken the work that was available to them. I would like to put that on the record as a way of confirming that for you.

[Lauren van den Berg]

Yes, absolutely. I appreciate the CERB comment and remarks regarding transmission rates. One of the frustrating points about the Ontario government is the lack of transparency in terms of sharing its data. Right now, we're working off the numbers from Dr. Henry in British Columbia, which has been the only region to share numbers so far, and restaurants clock in at less than 0.1% of transmission data. We are the safe alternative to private gatherings. Our members have invested $750 million in PPE equipment and staff training to ensure you can come and eat a meal with family and friends.

[Ted Falk, Conservative, Provencher, MB]

Mr. Cassidy, I've been listening closely to your comments. Would a refundable investment tax credit on new capital purchases address your concerns?

[Mike Cassidy]

That's a very good question. For a refundable, what I would be scared of is the amount. When you take a $600,000 motorcoach, for example, what would the percentage be? When we look at the public transit infrastructure fund, in many cases there's the 40¢ federal dollars in this program. In many provinces, it's matched by 33% dollars. I'm a bit worried, with a refundable tax credit, about whether we would have enough actual cash dollars for the purchase of a motorcoach.

When you are buying your motorcoaches, you also have to understand that with the capital cost allowance, many times—depending on the number of motorcoaches you have—you get your taxable income lowered through the CCA. If you then had the refundable, I don't think it would give you the amount of cash that a capital program would for your operation.

[Ted Falk, Conservative, Provencher, MB]

That's what an investment tax credit would be. If it would be refundable, it would be on the purchase of a new capital asset. Years ago, there was a program that offered 10% on the purchase of any new capital asset. That's right up front. That would be a huge stimulus to your business.