Finance Committee on March 17th, 2021

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. Potter.

We'll go to Mr. Roy for a quick answer.

[Martin Roy]

I just want to say that there's a difference. In Quebec, in particular, the program wasn't very popular because other loan programs had already been promoted, particularly in the cultural sector, by SODEC and by different organizations. In Quebec, the program was a little less useful and a little less in demand.

I gather that, for non-profit organizations in the rest of Canada, going into debt over and over again is an issue when they don't have the fixed assets or capital to ultimately support this.

Festivals and events are generally in a fairly precarious situation. In fact, the situation was precarious before the pandemic. Emerging from the pandemic with a number of debts constitutes a burden for the future and for the recovery process. We would like to ensure as strong a recovery as possible.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

You can think about it during someone else's round of questions, but I've had a few complaints related to.... Ms. Potter, you indicated that for HASCAP you must be deemed viable by the lending institutions. I've been getting a considerable number of complaints from small businesses that the banks are not pulling their fair share. If anybody has anything to add on that later on, throw it in.

We'll go to Mr. Ste-Marie and then Mr. Julian.

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

Thank you, Mr. Chair.

I want to acknowledge all the guests and thank them for their presentations. The discussions have been very enlightening.

My first question is for Mr. Milliard.

You spoke about the Canada emergency rent subsidy and the importance of making it retroactive. As you pointed out, when we talk to the minister about this, she says that she would rather look forward, to the future.

How would you argue that making this subsidy retroactive isn't the same as looking backwards?

[Charles Milliard]

Thank you.

I'll let my colleague Mr. Lavigne respond, if that's okay.

[Mathieu Lavigne, Senior Consultant, Public and Economic Affairs, Fédération des chambres de commerce du Québec]

As Mr. Milliard said, we agree that there should be as few retroactive programs as possible, normally. We understand this reality. However, there's an exceptional issue right now because of the way in which the previous program was designed. It was often impossible for SMEs to even apply for the program. There wasn't even a calculation to determine their eligibility. They were simply unable to apply, because the owners had to apply.

There's an injustice for some businesses. This doesn't apply to the majority of businesses, but to a minority of them. However, the injustice should be addressed in this specific case.

[Charles Milliard]

The request to make the program retroactive isn't ideological. The goal is to make the program operational. We're asking for the program to be made retroactive really because of a glitch in the program. The request isn't political or ideological.

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

Okay.

My next question is for Mr. Roy.

In terms of what you called the survival phase during the pandemic, you spoke about the importance of extending the emergency wage subsidy for hard-hit sectors until the crisis is over. You were talking about the first quarters of 2022.

What does the extension of this subsidy mean for the businesses, events and festivals that you represent?

[Martin Roy]

The emergency wage subsidy is vital right now. At this point, without the subsidy, the teams would be decimated and the expertise needed to organize festivals and events would have vanished. For now, the emergency wage subsidy is vital and necessary for the recovery.

When I talk about 2022, despite what I told you earlier and our complete willingness to operate this summer to the best of our ability and in accordance with the public health rules, we know that won't be able to generate the independent revenue that we're used to generating. We'll probably dig our grave a little deeper this summer by increasing our deficits.

In terms of our business models, which are essentially based on large gatherings, the real return to normalcy won't take place until early next year, when we can start selling tickets again. For example, the Quebec City summer festival will start selling passes again, as it normally does, in February or March 2022 for its July 2022 edition. The festival will really be a little more comfortable financially at that time, when the ticket revenue starts coming in. The same is true for the free festivals, which will also get their sponsors back at that point.

So we need to cross the desert. Right now, the festival and event sector isn't dying, but we're about halfway there. We don't think that we'll be out of the woods until early next year.

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

Mr. Chair, do I have time for another question?

[The Chair, Liberal, Wayne Easter]

Yes, you do.

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

Okay. Thank you.

I'll turn to Mr. Milliard or Mr. Lavigne.

In your presentation, you spoke about the tourism industry. You said that you were going to let others speak, since the industry was well represented on the panel here. I'm concerned about this industry, about the hotels, and about the whole ecosystem of this sector. I would like you to outline your specific requests for this sector, knowing that greater Montreal is the main destination for international conventions under normal circumstances. Obviously, all this has been shattered by the pandemic.

[Charles Milliard]

The main request is that the current measures remain in place for the sectors that still need them, namely, the tourism sector and the cultural sector. I found Ms. Bouman's presentation very touching in this respect. The measures really must be maintained.

It's important to stop thinking that the major hotel chains are foreign chains. This is very rarely the case. They're mostly Canadian properties. The reimbursement for 30% of fixed costs provided by some programs is nothing compared to the cost of operating these towers, which are empty. We're talking about businesses such as InterContinental or Marriott. Their hotels have occupancy rates of 15%, which is unbelievable. You would never think that this would happen in the worst crime novel that you could read.

This still requires federal government support. This isn't about introducing many new programs. It's just about making the existing programs more selective and keeping them open to industries such as these.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We will go to Mr. Julian, who will be followed by the next round, starting with Mrs. Jansen.

Peter, go ahead.

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

Thanks, Mr. Chair.

Thanks to all our witnesses for coming forward today on Bill C-14 and the fall economic statement. We certainly appreciate your willingness to speak with us today at the finance committee. We hope that you and your families continue to remain safe and healthy during this pandemic.

I'm going to start my questions with Ms. Potter.

Ms. Potter, Bill C-14 is based on the fall economic statement. The controversial part of the fall economic statement, of course, has been the famous “summary statement of transactions”, page 126, which talks about a cut starting April 1 through the course of the next fiscal year of nearly 50% in terms of program expenses, so a substantial reduction in program expenses.

We know that COVID is continuing tragically. We're seeing a third wave coming. You have mentioned very important initiatives that the federal government could be making this year—you named about five in all—that would make a real difference in Canadian tourism and the tourism industry.

How important do you think it is for the federal government to realize that the pandemic shouldn't be subject to an arbitrary cutback in program expenses and that the federal government should be looking to provide supports to industries that may not have necessarily received enough supports to date? What would happen to the tourism industry if the programs you have proposed and mentioned in your presentation weren't brought to bear? What would that mean in terms of the tourism industry by the end of the year?

[Beth Potter]

What I can tell you is that we know, based on the work we've done and the conversations we've had with the industry, that we would have about 60% fewer tourism businesses still surviving today had it not been for the various funding support programs that the government put in place. When I say we're grateful for those programs, it is, in fact, very genuine. The fact, though, is that the government mandated the tourism industry to shut down. It's going to be some time yet for us to see business come back, so we need to see those programs extended.

The other complication we have is that everybody has been sitting at home, mandated and encouraged to stay home in their houses, and there is a pent-up demand by Canadians who want to get out and travel again. As we are going to be competing with every other jurisdiction in the world, we would like to see Canadians exploring Canada this year, so we would like to give them an incentive to do that.

The Ontario government has already committed to doing so. New Brunswick did this last year, very successfully. We believe this would be a fairly positive way to encourage Canadians not only to get out and discover their own country, but also to keep that discretionary spending here at home.

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

Thank you.

My next questions are for Mr. Milliard and Mr. Roy.

Bill C-14 is based on last fall's economic update, which calls for spending cuts for the next budget year. As of April 1, in two weeks, we'll be entering the next budget year. We're seeing a significant decrease in spending. It's a decrease of almost half of what we spent in the first year of the pandemic.

Given the ongoing pandemic and need to support jobs and businesses, is it a mistake to cut programs?

Wouldn't it be better to extend the programs, as you suggested, Mr. Milliard, so that businesses and jobs can get through this crisis?

[Charles Milliard]

Mr. Roy, do you want to respond?

[Martin Roy]

Yes, I can start.

I hope that these estimates were the result of unbridled optimism. Perhaps it was thought that the second wave wouldn't be as large as it was, that we would quickly regain our momentum in April, May or June and that the programs would no longer be needed.

I hope that the federal government is fully aware that these programs are still needed as long as the situation remains serious. This was also the case with the second wave. We may not have seen it coming with the same magnitude, but it arrived. The programs are there, and they have been extended. The Canada emergency wage subsidy, for example, has been extended until June.

I don't see why the rationale would be different for a third wave. I don't know how many waves there will be or how long it will take to recover.

The key is to be there. Mr. Trudeau said it. You must be there for the people, and he is. He must be there for as long as it takes.

[Charles Milliard]

I completely agree with Mr. Roy.

Programs shouldn't be cut. They should be made more restrictive for people who aren't allowed to do business right now. Restaurant owners don't have the opportunity to do business, for example. Hotel owners have the opportunity, although we know it isn't a real opportunity. These businesses must be supported.

Mr. Julian, you're right to say that the situation has changed since November. However, Canada's situation remains a major issue with respect to COVID-19.

We're not there yet.

[The Chair, Liberal, Wayne Easter]

This is your last question, Peter.

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

Mr. Milliard, you said that, in some hotels, the occupancy rate was 15%. In my opinion, this has a huge impact, not only in terms of the jobs associated with these businesses, but for the entire community. This means much less spending for all the suppliers of the hotels.

In general, shouldn't the federal government be looking at the sectors most affected by the pandemic and seeing whether any new programs could help these sectors?

[Charles Milliard]

Mr. Lavigne, do you want to respond?

[Mathieu Lavigne]

Yes, definitely.

When we talk about the hotel occupancy rate, we must think about the sectors directly affected, but also about the sectors indirectly affected. I think that's what you were referring to.

In Montreal, the hotel clients are people who attend business conventions. However, we mustn't forget about the restaurants, caterers and all the other businesses experiencing difficulties. In theory, these businesses can resume their activities. However, in reality, they can't fully resume their activities until the international clients associated with business tourism, for example, come back. These sectors must be addressed on an ongoing basis until they're back in business.