Finance Committee on Feb. 25th, 2021

[Mariam Abou-Dib]

I think President Laporte was saying that our government has taken the right steps right from the beginning to respond as quickly as possible to a crisis situation. Ensuring that working-class and middle-class families were the priority was the right way to approach this pandemic. It doesn't mean that everything was done perfectly right from the get-go, but it does mean that the government was reacting and responding as quickly as it possibly could.

Easing the supports is not the responsible response at this time. We're not there yet. I don't believe that easing the supports is going to solve or resolve any of the problems that have been outlined, whether it's on individuals or on the small businesses that are all in crisis at this time. As long as we have a pandemic, as long as people are asked to stay home and as long as businesses and organizations are closed, then people have to survive, and we have a responsibility, as a society, to take care of one another. The government is the facilitator of that care.

If we are going to start to think about an evolution in how we're going to be approaching benefits like the CRB, or other benefits under the employment insurance program, for example, looking at them from the perspective of how the recovery is going to take shape in the economy is going to be the way to do this.

One way of doing that, which is really key here, is for sectors that have been devastated and are looking at a whole transformation.... Workers in those sectors need to be transformed as well. How do we move people? How do we transition them from benefits like the CERB into employment that's meaningful? Training and investing in training—I think the government is looking at ways of doing that through the EI program—are really key here.

[The Chair, Liberal, Wayne Easter]

I'm sorry, Annie. We're going to have to move on to Mr. Fast for four minutes, followed by Mr. Fragiskatos.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

I have two questions, both for Mr. Kelly.

It's nice to see you again, Dan.

You mentioned that rent support is still not doing the job. You referenced that about 26% of small businesses can use the program. Have you been able to quantify how many additional businesses will or should be able to access the rent support program, and what criteria would have to change to allow them to access this program so they can survive?

[Daniel Kelly]

First let me say that the rent support program is a heck of a lot better than the earlier version. The new CERS program is leaps and bounds ahead of the failed CECRA program that was put in place at the beginning of the pandemic. When the Deputy Prime Minister took up her role in Finance, she listened to some of the recommendations that we and others were putting forward and adopted several changes, including putting it on a sliding scale.

There needs to be more promotion of the program, because there are still business owners who don't know. I found a few today in my emails. They tried the earlier version of the program, failed, and now have just given up on trying to access it, so that's a portion of the problem.

First, we have a letter outlining about a dozen different gaps that exist in the rent support program. One is that it doesn't apply to newer firms. If you don't have comparison years from 2019, you're out. You can't access it.

Second, the big one I mentioned earlier is that if you can afford to pay only a portion of the rent with the money you're getting from the subsidy, you're not allowed to use the subsidy at all. That needs to be fixed.

Third, there's a real gap for businesses that have both a holding company and an operating company. For that, even the previous CECRA program was more flexible than the current version, and we've been asking the government to make some changes. It did announce a tiny portion of the fix just yesterday, but there's a much more fundamental one that is necessary.

To answer your question about the scope of the program, it's not going to be available for everyone; it's only for those who have had losses.

I really like the fact that the government added the lockdown support. That was a smart move of Minister Freeland to put that in place for those who are shut down again as part of the second wave.

I would be comfortable if we saw 50% to 60% of small firms that have had losses applying for the program. That would put it in the range of the CEWS program for the wage subsidy and the CEBA loan program. That's where it should be. Unfortunately, it's less than half of that right now.

[Ed Fast, Conservative, Abbotsford, BC]

You also mentioned that new businesses were promised they were going to get access to more support programs, and that was in fact never delivered. How many new businesses have been left behind because of lack of access to these support programs? Which specific programs, if you can do it very quickly, do you believe they need immediate access to?

[Daniel Kelly]

We've been begging governments to look at the plight of new business owners. I know they're sensitive to it and they're thinking about it, but, for goodness' sake, we're a year into the pandemic and these businesses have had no support at all. I don't have an exact number. There are thousands who reach out to the CFIB asking for help—people who have spent their entire life savings of half a million dollars to open a restaurant that has had no income and been shut down all of last year because of technicalities regarding their environment. This needs to change. It is desperate.

First, the program they need the greatest access to is CEBA—getting them a loan quickly. That $40,000 to $60,000 loan would help a great deal.

Second, we need to fix the wage and rent subsidy to allow them access to those two programs, because they have been real lifesavers for a whole bunch of businesses.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Mr. Fragiskatos.

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

Thank you, Chair.

Thank you to the witnesses.

My apologies. I had to disappear for an hour on a previous commitment, so if my question has already been answered, then I especially apologize.

I have a question for Mr. Kelly.

Mr. Kelly, in your introduction, you talked about the number of businesses that continue to be affected by debt taken on during the pandemic. If I'm not mistaken, the average small business has taken on 170,000 dollars' worth of debt. Is that right?

[Daniel Kelly]

You got it. Seventy-three per cent of businesses have taken on new debt at an average of $170,000.

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

What are some creative ways forward for those businesses to be relieved of that debt? I think of the post-pandemic period, and I know we're heading there, but we're not there yet. That's an enormous weight for those businesses and the economy as a whole, so I'd love to hear any thoughts on that.

[Daniel Kelly]

The good news is that the government has laid the rails for really good programs that could deliver with some minor modifications.

I wasn't a huge fan of the CEBA loan program at the beginning, I have to admit, but Minister Morneau, who hated my guts, put in place a good program before he left office. The CEBA program provided a $40,000 loan, of which $10,000 was forgivable. Minister Freeland expanded that to a $60,000 loan, of which $20,000 is forgivable. That should be expanded to $80,000, in my opinion, with 50% of the overall loan being forgivable. That would take away some of the debt load that businesses have faced.

The other one is HASCAP, the good program that Minister Ng and Minister Freeland put in place. There has been a terrible rollout so far, just to let you know; some of the banks have just now started to offer it. That HASCAP loan for those who have been highly affected, including those in the restaurant and hospitality sector, provides a loan of up to $1 million at low interest rates. The idea of providing a forgivable component—let's say a quarter of that loan would become forgivable upon repayment of the balance—sends the right message to the economy.

You need to be a going concern in order to get the forgiveness, but it relieves some of the debt. Businesses can't afford to keep taking this on the chin, and this, remember, is not their fault. We're privatizing societal losses on independent businesses that can't afford them.

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

Thank you.

I have not very long remaining. I hear what you're saying on the rent program not being available for new businesses. I wonder if you could speak to that. I think it's a vastly improved rent program. This is on top of all the other programs that have been introduced, which are really sustaining the economy right now in so many ways, or at least sustaining small businesses.

There is always room for improvement. We can always do better. I'd love to hear your thoughts again on the importance of getting that rent support to new business owners. I have a situation in my constituency where a restaurant just can't get that support right now. I'd love to get your thoughts on the record there.

[Daniel Kelly]

We have a whole separate letter about new businesses and how to fix all the programs, including on rent, and make it available to them. I get the government's concern about having these programs leak like a sieve and allowing fraudsters to create fake businesses in order to access government subsidies. It's a legit concern. I take it seriously.

There are a couple of things. You require them to have a business number before March 1 for some of the programs. I think that for the rent program it's September 1. If you didn't have that beforehand, you are ineligible. Also, you have to compare to 2019. If you don't have a similar month in 2019, you're ineligible. There's a whole host of rules that need to change. My suggestion is that the government allow the average for the industry in that province to be used as a calculator to determine the size and scope of the subsidy for, say, a restaurant in Ontario, in order to do the comparison.

We put all of this in a letter to Minister Freeland. The government knows what to do. We need to get them to move on this, because these businesses have been without any support for the entire pandemic.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there.

Dan, can you send a copy of that letter to the clerk as well, please?

[Daniel Kelly]

Yes, for sure.

[The Chair, Liberal, Wayne Easter]

I have a quick question for Mike Cassidy, and then Peter has a quick motion.

Mike, you know where I live, in the riding of Malpeque. A business just up the road here brings in about $300,000 a year just from the cruise ships. I see your charter buses going by there.

You said at the beginning that your charter buses will have been idle for pretty well two years. I farm. I know what it's like when you leave a piece of equipment idle. You don't hop in and start it up. You said in your remarks that you need to be ready, willing and able to roll those buses when they need to run. How are you going to do that? What do you need to do to have them in shape to go? What does the government need to be doing?

[Mike Cassidy]

In our industry, if you sit with a motor vehicle, especially after two years, we're estimating that it's going to be $20,000 to $25,000 per motorcoach to get that coach up, willing and able to go to work in 2022.

If there was a loan that could be put in place per motorcoach, that amount of money could get help us get our coaches ready, willing and able. It's no different when we talk about HASCAP and a forgivable portion, or $80,000 with a forgivable $40,000 for small businesses. It's the same concept in the motorcoach business. If we bring our buses to the dock, and if the person up the road who depends on $300,000 from cruise ship arrivals.... We would bring our buses to the dock in 2022, 2023 and 2024. Have a portion, or all of the loan, forgivable.

It's not just your business up the road. We have hotels and small motels that are for sale now because our motorcoaches are not stopping at their doors and people in our motorcoaches are not paying for the rooms. They're not getting their meals there. It's a trickle-down effect, but it's very dangerous.

[The Chair, Liberal, Wayne Easter]

I'll release the witnesses before we go to Mr. Julian's motion.

Thank you to all the witnesses. These are extremely difficult times. We know that. On the positive side, the ideas that come forward from the entire community always amaze me. There are good ideas here today from the unions, operators, businesses, etc. There are tremendous ideas out there. We welcome them at this committee, and we welcome the constructive criticisms as well. We try to work across party lines to see what we can do.

Thank you very much for your presentations. We understand the heartfelt concern in your area.

Mr. Julian, you had a quick statement.

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

Yes, Mr. Chair, thank you.

Thanks to our terrific witnesses. They were amazing today, and we learned a lot.

For subsequent weeks, as we talked about in the motion I presented a couple of weeks ago to start this study, the parties will need to provide their witnesses and schedule their witnesses.

I want to be clear that this is the intent and we will be submitting a list for next week or the week after. I understand that next week we will have more targeted sessions, but for the following week, of course, we want to ensure we get the witnesses we want.

I just wanted to flag that.

[The Chair, Liberal, Wayne Easter]

Next week is tied up with the law clerk and Bill C-208. The following week, there will probably be another session on Bill C-208. That's Larry Maguire's bill. We'll have to see what comes at us from Parliament after that.

Our intent is to keep going with witnesses on COVID-19. You can see the good ideas that are coming forward. We can be helpful to everyone in terms of providing that information up the line. That's the intent.

I'll ask the clerk to confirm, but we already have 40 or 50 witnesses on the lists from the parties. We'll have to sit down as a steering committee and set some priorities after we get through next week.

Thanks to all.

The meeting is adjourned.