Finance Committee on March 17th, 2021

[The Chair, Liberal, Wayne Easter]

Can you keep it fairly tight, Mr. Cochrane?

[DT Cochrane]

Yes.

First of all, I spent eight years getting it, so I'm going to correct you: It's “Dr.” Cochrane.

As I said in my presentation, the fact that the government has access to unlimited financial resources doesn't mean spending is unlimited, because those financial resources have effects in the material economy. That's where the concern needs to come in.

I will specifically respond to the comments from Mr. Wudrick and Mr. Moody about the debt ceiling. Focusing on this as a blunt instrument—Mr. Wudrick referred to other policies as “blunt instruments”—is just inviting disastrous brinkmanship, as we saw in the U.S. around the debt ceiling. The debt ceiling is a meaningless thing that really just serves to make us feel good, considering that every dollar the Canadian government spends into the economy becomes someone else's asset in the non-federal economy.

Mr. Moody wants to equate the federal government with households. I don't know about Mr. Moody, but I don't have my own bank. The federal government has its own bank. That's how it's able to spend money into existence. The concern is what happens when it's in the economy.

[The Chair, Liberal, Wayne Easter]

Mr. Cochrane, I don't want to get into a debate between witnesses, although we might have to go there. If the others want to respond at some point, go ahead.

We'll turn to Mr. Ste-Marie, followed by Mr. Julian. You have five minutes.

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

Thank you, Mr. Chair.

Good afternoon, everyone.

I want to say to Ms. Bédard and Ms. Laurin that I found their testimony heart-wrenching. Their testimony was about sugar bushes, reception halls, the reality of self-employed workers and the fact that the programs provided during the pandemic were poorly adapted to reality, to put it mildly. The least we can say is that their testimony was really touching. I hope their members will manage to overcome the terrible crisis they are going through.

My first questions are for Ms. Laurin.

Going from 240 sugar shacks to fewer than 140 has a devastating effect. As you mentioned, last year, you mobilized $300,000 in goods. That money was lost, as receptions and weddings were not held during the summer. The season was lost. The scenario is the same for the second year: everything is being lost.

I would like to know whether the measures and criteria implemented meet the needs of your members and of your sugar shack.

[Stéphanie Laurin]

Thank you very much, Mr. Ste-Marie.

Indeed, we invested $300,000 to prepare for the season. However, in 2020, my establishment incurred nearly $1 million in debt, taking fixed costs into account. Every establishment that is a member of the association is currently in the same situation.

Are the available programs adapted to our industry? The answer is definitely no. Unfortunately, our businesses have been closed for 12 months. The wage subsidy will come to an end in June 2021, and we won't have resumed our activities. In that sense, the wage subsidy is not adapted to our industry. I am adding to all this the loan system of the regional relief and recovery fund, RRRF. That system provides interest-free loans. We are extremely grateful for it, but a question remains: how can we repay that loan without an income?

We are currently struggling to pay our bills. Some owners had to sell their home and are living in their establishment, as they lack cash flow. The situation is truly disastrous for those business owners.

The only assistance systems available to them are repayable, interest-free loans. We are grateful for those, but we will unfortunately not be able to repay the loans over the medium term. If we consider the Canada emergency business account, CEBA, we see that it's a loan of $60,000, $20,000 of which is subsidized. Thanks to the assistance systems available to our industry, every establishment can receive $20,000 through CEBA. Otherwise, the money provided through other assistance programs is repayable.

So I am confirming that this is not adapted to our needs. $20,000 is equivalent to the fixed costs we have to pay to run the establishment for about two weeks.

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

Thank you.

What I hear you saying is that the government is going to have to come up with programs that meet your needs. Providing low-interest or interest-free loans is fine, but you can't survive for two years earning next to nothing. Thank you.

I don't have a lot of time, so my next questions are for Ms. Bédard. I'll try to come back to you later, in the next round.

Ms. Bédard, some three million people are self-employed. The programs the government has introduced since the pandemic began have been ill-suited to their needs. Your members are falling through the cracks, so you are constantly working to keep them from being shut out, but it's not working. It is ridiculous what your members are being told by people at the Canada Revenue Agency, or CRA; they are suggesting your members go on social assistance or walk away from their businesses. It's utter nonsense.

Before you comment on the situation, could you give us examples of people who are self-employed? What businesses do they run? What do they do? Give us a clearer sense of the people you represent. Then, feel free to make your comments.

[Caroline Bédard]

They are active in a wide range of sectors. We represent actors, singers and groups, as well as aestheticians, hairstylists, manicurists, social media managers, website creators, business coaches and accountants.

Since a self-employed worker is not clearly defined, there is often confusion among someone who runs a business through a corporation, someone who has no employees and someone who runs a registered or soon-to-be registered business. A self-employed worker is not someone whose business is incorporated. The category is very broad and even includes people who do domestic work. They are people who provide services we all need but whose work is not recognized at the end of the day.

Now I will make a few comments.

What constitutes a self-employed worker is not clearly defined, and that is why our members run into problems with the CRA. Conversely, a wage earner is clearly defined. When a wage earner calls the CRA to find out about the status of their application, they get a clear and specific answer. The person knows what they can and can't do. However, the answers are not as clear when a self-employed worker is asking the questions.

Self-employed workers have to satisfy a number of requirements. Some have been denied access to program benefits outright. In those cases, we have to help them appeal the decision. We manage to win appeals, but the excessive wait times are onerous. If 18 weeks have already gone by and we have to file an appeal, that means the person has to wait weeks longer. When a self-employed worker’s business closes and they aren’t eligible for the Canada recovery benefit, they have absolutely nothing in the way of supports. They are not eligible for the Canada emergency wage subsidy because they don’t have employees. They do not qualify for the Canada emergency rent subsidy because they don’t have a business number. All they have access to are the interest-free loans, but that measure is no help either.

They have no options other than the Canada recovery benefit or the Canada emergency response benefit, which were available last summer. It's incredibly hard on these workers, who experience a high level of distress. I am aware of three suicide attempts since January 18. We do not want things to get to that point.

We would really like to see these workers receiving help. I know full well that some self-employed workers applied for benefits they were not entitled to. However, those who were eligible for benefits really needed them to buy groceries and pay the rent. In 80% of cases, they work from home.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. Bédard.

Just on that point, could you send the clerk a letter explaining what I think you feel is harassment from CRA toward self-employed workers? Send it to our clerk, and we might talk about it and see if we can send it on.

[Caroline Bédard]

Yes, I would be happy to.

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

That's a good idea.

[The Chair, Liberal, Wayne Easter]

I do hear the same. It's a lack of understanding of what a self-employed worker is.

We will go to Mr. Julian, followed by Mr. Kelly.

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

Thank you, Mr. Chair.

I want to thank Ms. Bédard for her poignant remarks. We will certainly look into the matter.

I will have questions for her a bit later. Now, though, I want to welcome the witnesses.

We hope you and your families are staying healthy and safe during the pandemic. Thank you for appearing before the committee.

My first questions will go to you, Dr. Cochrane.

We are dealing with Bill C-14, which is linked to the fall economic statement. As I'm sure you're aware, the fall economic statement forecasts significant cuts in program expenses for this next fiscal year, which begins in a couple of weeks. There is great concern, I think, that the government is looking to reduce supports at a time when a third wave is hitting Canada, tragically, yet in the fall economic statement and in Bill C-14, in the face of a third wave, there is absolutely no reference to measures that would help bolster the resources available to provide supports for Canadians.

I know that Canadians for Tax Fairness has talked about this, about the importance of establishing a fair tax system and putting in place, as other countries have, a wealth tax, responding to the pandemic in the way we did to the Second World War, when we put in place an excess profits tax. Instead, the government seems to be basically giving a blank cheque to companies that are profiteering during this pandemic. Billionaires have increased their wealth by over $60 billion. Canadian banks are reaping record profits, with government liquidity supports at a record.

In that context, how do you feel about the government's refusal to put in place a wealth tax and a pandemic profits tax so that we have the resources and the wherewithal to provide all the supports for people that you spoke of so eloquently during your presentation?

[DT Cochrane]

I think it's incredibly misguided not to have these as part of what I call the “fiscal tool kit”.

I voiced some disagreement from Mr. Wudrick and Mr. Moody, but I will echo their call for a budget. I know that one is coming, but I agree that it's unacceptable that we've been two years without a budget. A budget should have come out, even though it was early days of the pandemic, to state that although there's a high degree of uncertainty, here's what we think we're actually going to do.

There was a lot of goodwill on the part of Canadians for the government muddling its way through, as long as it was doing what it could to support people. If the government does not maintain those supports going forward, it risks letting a lot of people start to fall through the cracks. Even as the economy, the macroeconomy, looks like it's recovering, there will be lot of people left behind in that recovery.

We've heard talk about this K-shaped recovery, in which some people are weathering the situation just fine. As a report from Canadians for Tax Fairness showed, through the first three quarters of 2020, 34 of 100 corporations that we looked at had record profits, so while the economy for most people was not great, for some it was excellent.

We need to use all of the tools that are available to us—like wealth taxes, like excess profit taxes—in order to keep the money moving and ensure that the support exists for those who otherwise will fall through the cracks.

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

Thank you for that.

We have the singular illustration of the Spanish flu. We have seen, in all the analyses done after the Spanish flu, that for lower-income people in that period a century ago, it took over a decade for them to have in place the financial resources they had before the Spanish flu pandemic hit. We're dealing with a situation in which people are struggling to put food on the table, struggling to make ends meet, and yet the federal government seems absolutely unwilling to put in place even the rudimentary foundations of a fair tax system.

My second question goes to that.

We've had people come before this committee and kind of brush off the idea of tackling overseas tax havens. The parliamentary budgetary officer projects that we'll lose $25 billion this year. These are in tax revenues that go to overseas tax havens. That could provide so much support for people. You mentioned child care, affordable housing—all these things that Canadians are forced to struggle without. Pharmacare, of course, the Liberals and Conservatives said no to, but I think Canadians will come back to them on that in the next election.

All these things that are essential for Canadians, the government brushes aside—

[The Chair, Liberal, Wayne Easter]

Let's have a quick question here, Peter.

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

—and yet there has been no action on ending tax havens.

How important is it to make a concerted effort against overseas tax havens in order to provide the foundation that you spoke of in your presentation?

[DT Cochrane]

It's incredibly important.

These tax havens are used by the wealthiest of the wealthiest of the wealthiest. This is not an instrument that's available to you or me. The very use of it is automatically raising questions about why this is being done. This is implicated in issues with what's called “base erosion and profit shifting”, meaning that companies are able to move profits to offshore low-tax havens even though the profit-making work is actually happening here. It's just a way of exploiting the rules. Often they're operating right at the edge of what's legal in order to just maintain their pools of wealth, again, as I described, because of our trickle-up economy. They didn't work harder for it. They didn't earn it through any sort of virtue or contribution to society. It's just a function of the fact that they own and asset and they want to hold on to as much of it as they possibly can, and then they will spend it in ways that have distorting effects on society.

How many people earn incredible incomes that help them figure out how to massage the rules so they can get away with parking their money in a low-tax tax haven, while also enjoying all of the benefits that come from living in Canada?

[The Chair, Liberal, Wayne Easter]

Okay. We're going to have to go to Mr. Kelly, followed by Mr. Fraser.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Actually, Mr. Falk is going to take this round, and Ms. Jansen will take the final round.

[The Chair, Liberal, Wayne Easter]

All right. Thank you. Mr. Falk is first.

[Ted Falk, Conservative, Provencher, MB]

Thanks, Mr. Chairman, and I'm sure you didn't give me a heads-up there so I wouldn't step on Mr. Julian again. Sorry about that, Peter.

Thank you again, witnesses, for your testimony. I appreciate it very much.

You know, the fall economic update provided Canadians with the information that they could expect a $381-billion deficit this year, with maybe another $100 billion more of post-COVID spending. Those are monumental numbers.

Now, this bill we're debating today is asking us to increase our debt ceiling. To use the words of Mr. Moody, I would hate to be considered Mr. Orange's credit card authorization person, the person who's going to authorize an increased spending limit to get us into further debt levels that are possibly unwarranted and certainly unjustified.

I would like to point out that former Parliamentary Budget Officer Kevin Page, who reads financial statements and updates for a living, made the comment that he was unable to follow the money in the fall economic update statement. Now we're being asked to provide approval for increased spending outside of a budget. It is actually budget time. It was budget time over a year ago, and we haven't had a budget.

Mr. Wudrick and Mr. Moody, you both rightly said that it's time for a budget, and if some of these measures would be included in a budget, there would be the opportunity to show Canadians in a transparent way where the money is going to go. As it is, there's a lack of transparency, and Canadians just don't know where the money is going.

Could you comment any further on that?

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Moody.

[Kim G.C. Moody]

Sure.

I can't disagree. Canadians really want to see where this money is going. I've tried to piece the puzzle together and I just can't. It's shocking to me to see how much money is going out the door. I do agree that a lot of it was necessary, for sure, at the front end, but there need to be accountability and transparency.

I don't know if I have much more to say, other than that we need a budget. Certainly the answer is not in offshore monies, as Mr. Cochrane says. That's just fantasyland stuff, but all in all, we need transparency and accountability.

[Ted Falk, Conservative, Provencher, MB]

Mr. Wudrick, what would be your opinion on that?