Finance Committee on April 1st, 2021

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome to meeting number 32 of the House of Commons Standing Committee on Finance. Pursuant to the committee's motion adopted on Friday, February 5, 2021, the committee is meeting to study all aspects of COVID-19 spending and programs.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, and therefore members are attending in person in the room and remotely using the Zoom application. Proceedings will be made available via the House of Commons website.

Just so that witnesses are aware—members certainly are already aware—the webcast will always show the person speaking rather than the entirety of the committee.

I would remind folks to try to keep their mike off when they're not speaking.

Witnesses, if you want to add a comment to somebody's question, even if it's directed elsewhere, just raise your hand and I'll try to catch you. If I miss you, you'll have to put your mike on and yell.

With that, we do have a couple of orders of business. I'll split them and do one with this panel and one with the other before we go to witnesses.

The order of business that we must deal with is the budget for the Bill C-14 hearings we already completed. The request for the project budget, just to name it, is Bill C-14, an act to implement certain provisions of the economic statement tabled in Parliament on November 30, 2020 and other measures, and the amount requested is $5,025.

Does somebody want to move that motion?

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

I can do it.

[The Chair, Liberal, Wayne Easter]

It is moved by Mr. Ste-Marie and seconded by Ms. Dzerowicz.

Is there any discussion on that?

(Motion agreed to)

Great. If only all these things could be so simple.

Welcome to the witnesses appearing before us virtually today. We appreciate your coming in this new set-up.

We'll start with Mr. Paquet from the Alliance de l'industrie touristique du Québec. If witnesses could try to hold their remarks to about five minutes, it would leave more time for questions.

Mr. Paquet, welcome back. The floor is yours.

[Éric Paquet, Senior Director, Public and Governmental Affairs, Alliance de l'industrie touristique du Québec]

Thank you, Mr. Chair.

Good morning, Mr. Chair.

Good morning, members of the House.

I am pleased to be before the committee today. I thank you for the invitation.

I am joined by Mr. Jean-Michel Ryan, chairman of the board of the Alliance de l'industrie touristique du Québec. He will be happy to answer your questions later if necessary.

I will be happy, of course, to answer any questions in English as well.

The Alliance de l'industrie touristique du Québec is the voice of 10,000 tourism businesses and federates 40 regional and sectoral associative partners. It also has a mandate to promote and raise the profile of Quebec as a destination on a national and international scale.

The alliance has also created the Conférence économique de l'industrie touristique québécoise, which is composed of six women and six men business leaders and entrepreneurs in tourism. The conference has in fact submitted numerous recommendations to the government to adequately support tourism, one of the sectors hardest hit by the pandemic.

Prior to the pandemic, the tourism industry was thriving in Quebec as these figures show: $16 billion in tourism revenues, 30,000 businesses, or 12% of Quebec businesses; 400,000 jobs, or one in ten jobs in the province; $3.5 billion in export revenues, making it Quebec's fifth largest export product; 2.5% of Quebec's GDP; $2 billion in tax revenues for the government. In Canada, 2019 was a record year, when tourism spending reached $105 billion.

Since the start of the pandemic, Quebec's tourism industry has suffered colossal losses of approximately $10.5 billion and a net loss of 81,000 jobs in the accommodation and restaurant sectors alone. While 98.5% of economic activity has now recovered in Canada, the tourism sector remains paralyzed and the prospects for recovery, still uncertain.

Over the past year, the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy have been very well received by the tourism industry. In fact, they have served as a lifeline to many entrepreneurs who would have closed their businesses without this assistance. These federal programs remain vital to the tourism industry, and they must be extended through 2022 to give the industry the predictability it needs to deal with the realities I am about to address.

First, there is the financial precariousness of the majority of tourism businesses. These companies find themselves nearly cashless and in debt as never before, having had to take out loans just to get out of the crisis, not to finance growth or the creation of a new product or strategic partnership.

Second, there is the continuing uncertainty about the evolution of the virus. This influences restrictions on travel, gatherings, and reopening of borders, and destabilizes the industry on an ongoing basis. It should be noted that over 53% of tourism spending in Quebec comes from visitors outside of Quebec.

Third, there is the labour shortage. Already representing a significant problem, this has been accentuated by the pandemic. Indeed, there is currently an exodus of expertise and experienced employees to other sectors less affected by the pandemic. In Quebec alone, 40,000 jobs are still to be filled for the summer.

The extension of these programs is therefore essential.

Also, specifically with respect to the Canada Emergency Rent Subsidy, it is time for the government to recognize the opportunity for tourism businesses to benefit from the lockdown support measure of the additional 25% fixed cost coverage.

Mr. Raymond Bachand, President of the Conférence économique and former Quebec minister of finance, said that there are two ways to close a business: either you force it to close its doors, or you prevent people from going there or using its services. Clearly, in the latter case, closing the borders, banning gatherings, limiting travel, preventing meetings and conventions, and prohibiting school trips and sports tournaments are all measures that strike directly at the heart of tourism. They prevent tourism businesses from operating normally or simply staying open.

As I said, the border closures alone are taking away the majority of the industry's revenue, and the other restrictions in place are reducing revenue in the accommodation, attractions, festivals and events sectors by at least 25%.

In order to stem the exodus of management and skilled personnel from the tourism industry, we recommend that the Emergency Wage Subsidy be enhanced to the rate of 85%.

In addition to these programs, we believe that the federal government must have a national reopening plan, which would include a timeline for reopening the borders as well as safe and traveller-friendly rules and conditions. We urge the government to work with associations representing business to explore possible solutions.

Finally, it is imperative that the government work with the provinces to put in place uniform and standardized health rules to facilitate travel across the country.

In closing, I invite you to review the letters submitted over the winter by the Conférence économique to Ms. Freeland, the Deputy Prime Minister and Minister of Finance, and the Alliance's pre-budget consultation brief. You will find all of our recommendations in it.

Thank you for your attention.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Paquet.

We will turn now to Victoria Morton, who is appearing as an individual.

Victoria, I'm not sure if you have an opening statement or not. The floor is yours.

[Victoria Morton, As an Individual]

Thank you, Mr. Chair.

I provided a written statement in advance, so I won't use the five minutes here. I'll just quickly summarize a few points before passing it back to the committee.

I was an employee of WE Charity from November 2018 to June 2020. First I was a strategist, and later I moved to the executive office, where I supported Craig on the road in Canada, the U.S. and the U.K. I also increasingly took on his social media, including, perhaps most notably now, his LinkedIn, which is what I assume has led to me being here today.

I will openly say in advance that I don't have any insight or visibility—then or now—to WE Day talent contracts, the Canada student service grant, anything WE Villages-related, or really anything to do with finances or the structure of the organization.

That said, I'm happy to answer any questions that I can today. Thanks for having me.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Morton.

We will turn now to Grant Thornton LLP, with Mr. Kevin Ladner, CEO, and Ms. Benham, national tax leader.

Mr. Ladner, I assume that you are leading off. Go ahead. The floor is yours.

[Kevin Ladner, Chief Executive Officer, Grant Thornton LLP]

Thank you.

We would like to thank Chair Easter and the committee for the opportunity to present. We're here today to talk about the Canada emergency wage subsidy.

We commend Parliament for its quick action back in the spring of 2020, enacting the first wage subsidy legislation within just two weeks of the pandemic being declared and then following up with the more comprehensive Canada emergency wage subsidy shortly thereafter, with several other amendments along the way. The CEWS has been a lifeline, particularly for small and medium enterprises, which play a pivotal role in sustaining Canada’s economy. It continues to do great work in keeping the economy afloat and helping it grow.

Our main concern is the lack of flexibility that remains in the program and the inability of Canadian businesses to access it if they miss the application deadline or make a mistake in their filing. Such inflexibility seems contrary to both the purpose of the program and the spirit of the Income Tax Act in which these rules are found. Our perspective is that the lack of flexibility is impacting deserving companies in need across Canada in every sector, whether it be hospitality, tourism, fishers, restaurant owners, manufacturers, designers or construction workers.

We are respectfully requesting that Parliament introduce new legislation to allow for CEWS and CERS claims to be filed or amended past the deadline. We’ve provided suggested wording for that legislation as an appendix to our original letter to Chair Easter. We also ask that such an extension apply similarly to the Canada emergency rent subsidy, given that it also has a hard deadline.

I'll now pass the presentation over to Tara.

[Tara Benham, National Tax Leader, Grant Thornton LLP]

Thanks, Kevin.

Let's look a little more closely at the issue. Currently, if the deadline is missed, the applicant loses 100% of the subsidy. There is no ability to amend the claim upward, so if the business finds they have made a mistake that would result in a larger claim, that opportunity is also gone once the deadline has passed. To underscore this point, we want to provide you with two examples of some of the likely unintended consequences of not allowing these claims to be filed late.

In Ontario, we have a client in the financial services industry who only realized at the last minute that they would qualify for CEWS. They reached out to us on very short notice to file their claim. Due to some recent turnover in their staff, they didn't realize they didn't have online access set up. Although we attempted to get it set up, it was too last-minute. We were unable to file the claim on time. As a result, this business lost out on the support for 129 employees.

Another business, in the software development industry in Quebec, prepared their own claim. The owner thought he had to deduct $25,000 from his CEWS claim for every period between March and June to which he also got the temporary wage subsidy, so he reduced his claim by a total of $75,000. However, the maximum temporary wage subsidy is only $25,000. He was actually entitled to an additional $50,000 of CEWS. He realized this mistake in late February, which was of course past the due date. Because the deadline had passed, it was too late to amend his claim. He lost out on that 50,000 dollars' worth of support.

The legislation and the accounting for CEWS is complex, and it's new. In the 12 months since the pandemic began, small and medium-sized enterprises across Canada have been focusing intently on keeping their businesses running and on keeping their employees employed, not on their accounting. We have provided examples only of missed CEWS filings at this point, because the first filing for CERS has not passed. However, it too has similar complex legislation and hard deadlines. Therefore, it's a given that there will be misses in this program as well.

We do recognize that given the rapidly changing nature of this legislation, the introduction of this deadline rigidity may have simply been an oversight. However, both existing legislation and jurisprudence support the ability to file tax returns, elections, forms, etc., past the applicable deadlines. We ask for the same treatment for CEWS and CERS. We all know that these programs are finite. They won't be around forever. Therefore, if we don't fix them now, many Canadian businesses may never recover.

In summary, we respectfully recommend that the CEWS and CERS legislation be amended to allow for some type of late filing. This will reflect the intent of the legislation and it will help more Canadian businesses keep their employees working.

Thank you.

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

I have a point of order, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Benham and Mr. Ladner.

Go ahead, Mr. Kelly, on your point of order.

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

I really didn't want to interrupt any of the witnesses.

Ms. Morton mentioned a written statement. I have not received it. I know that sometimes it's an issue of translation or the ability to get it to members ahead of time. I just wanted to confirm with the clerk that if he believes it has been circulated, then I have not received it. If it hasn't been circulated, then I wanted to flag that.

[The Chair, Liberal, Wayne Easter]

I haven't seen it either. I expect it's in one language and not translated.

Alexandre, do you want to comment on that, please?

[The Clerk of the Committee, Mr. Alexandre Roger]

Yes.

We received it in English only. I would encourage Ms. Morton to just read it into the record. If she doesn't want to, we can have it translated. I can distribute it to the committee as soon as we get it back.

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

Thanks.

[The Chair, Liberal, Wayne Easter]

Okay.

It's not too long, I gather. We'll get Ms. Morton to read it into the record when we finish the rest of the witness list.

Are you okay with that, Ms. Morton? Thank you.

We'll turn now to Northwest Territories Tourism, with Ms. Demarcke, CEO.

[Donna Lee Demarcke, Chief Executive Officer, Northwest Territories Tourism]

Thank you.

I'd like to thank you for inviting Northwest Territories Tourism to be part of this important conversation. I also want to express our gratitude for the critical support given by the federal government to help the tourism industry in the Northwest Territories survive what is an unprecedented health and economic storm.

In 2019, before the pandemic, the NWT welcomed 120,000 visitors. These visitors spent over $210 million directly in the tourism industry. Since March 2020, the Northwest Territories border has been closed to leisure travel. The most recent research, conducted in October 2020, showed that 70% of tourism respondents lost annual revenue of between 76% and 100%. This past year has been devastating to all tourism activities in the Northwest Territories. It has meant that the tourism operators who chose to remain open have had to repurpose their activities in creative ways as they attempt to generate some staycation revenue to keep their lights on. Tourism operators have been resilient. They have changed their business models, offering summer day camps for children and other ventures well outside of their normal business.

While we are proud of the ingenuity of our tourism operators, we must state that the just over 15,000 households in the NWT will never make up for the revenue generated by our 120,000-plus visitors we normally see in a year. As you can imagine, tourism is extremely important to the Northwest Territories. Many tourism businesses have remained closed because it is not viable for them to open their businesses for the staycation market, while some have closed permanently. In the survey conducted in October 2020, only 21% of tourism businesses [Technical difficulty—Editor] 42% of businesses were temporarily or permanently closed.

The first thing I would ask of this committee is for the federal government to continue the current economic supports that are in place for the tourism industry for as long as it takes for travel to fully resume. Eventually, the NWT borders will reopen to leisure travel. When this happens, tax incentives for the 2021-22 fiscal year to support local travel within Canada would be extremely helpful, as we would then be able to try to attract travellers from Canada, where normally the Northwest Territories relies heavily on international travel visitation, particularly in the winter months.

Support for national airlines and local airlines as critical infrastructure to support travel will be important when travel resumes. Air Canada did cancel flights to Yellowknife earlier this year. Without the support for airlines, visitors won’t be able to visit us—not if they can’t get to the Northwest Territories.

I would like to share that the goalposts for the easing of pandemic restrictions are continually changing. Messages are confusing. This confusion causes a great deal of frustration in our industry. While we realize that the virus is changing and that this is the first-ever pandemic in living memory, we would like to ask the federal government to take the lead on devising a scenario-based plan for the reopening of travel. The plan needs to be science-based and data-driven.

There are some variables that we think could be included in a scenario-based plan. Set a benchmark for the percentage of the population that needs to be vaccinated for travel to safely resume. Hearing different numbers in the media daily, and hearing uncertainty about the usefulness of vaccines in allowing travel resumption, is frustrating and disheartening. Outline the role that rapid testing and contact tracing can play in safe reopening. Set consistent processes and standards. Set the safety measures that need to be in place to support travel, from border crossings to the tourism business level.

The plan must include some lead time for tourism industry businesses to prepare for reopening, which will likely take some months, and include such things as hiring staff and re-establishing partnerships with airlines, hotels and other partners. If the federal government were to set a national standard, then individual provinces and territories could implement or revise these as appropriate. It would be very helpful, though, for the federal government to take the lead.

I think it is important to note to the committee that COVID-19 has created a false economy. When the pandemic subsides, many jobs related to the pandemic will be lost. The jobs currently held by contact tracers and border security officers, isolation centres hosted by hotels, and other related jobs will disappear as the pandemic abates. In the NWT alone we have a COVID secretariat that employs 187 people. The need to get the tourism sector up and running before or in tandem with the disappearance of these jobs is critical. This is another reason to have adequate lead time and a reopening plan.

The federal government supports have been critical to our industry. Without these supports, we would have no industry left when the pandemic eases and tourism resumes. All funding sources have been accessed by our industry. By far the most uptake has been in the northern business relief fund and the regional relief and recovery fund. The Canada emergency wage subsidy and the Canada emergency response benefit have also been very important. Tourism operators have also taken advantage of loan programs and the work-sharing program.

The most important thing I can say to you today is this: Please extend these programs for as long as the pandemic impacts travel, particularly leisure travel.

Thank you for your time today.

[The Chair, Liberal, Wayne Easter]

Thank you very much for your remarks, Ms. Demarcke.

Before I turn to the last witness, I want to give you a heads-up on the question list. First up will be Mrs. Jansen, followed by Mr. McLeod, Mr. Ste-Marie and Mr. Johns.

We will turn to Transparency International Canada, with Mr. Cohen, executive director.

The floor is yours, Mr. Cohen.

[James Cohen, Executive Director, Transparency International Canada]

Thank you, Mr. Chair.

I understand that I am in a low Internet capacity area right now. I've been advised by the clerk that I might need to turn off my video so that the audio comes through adequately.

[The Chair, Liberal, Wayne Easter]

That's not a problem. Go ahead.

[James Cohen]

Mr. Chairman and members of the committee, thank you for inviting me to speak today. My name is James Cohen, and I am the executive director of Transparency International Canada. TI Canada is a registered charity and is the Canadian chapter of Transparency International, the world’s leading anti-corruption movement.

Canadians and the world have gone through a difficult, sad and exhausting year owing to the COVID-19 pandemic, and we are not done yet. In order to react to the pandemic, the federal government has had to spend unprecedented amounts of money in a short time. These funds were needed to procure essential medical supplies and equipment and to support Canadians experiencing economic distress.

In this time of need to fight the pandemic and support Canadians, it is also critical that transparency and accountability are preserved and even strengthened. In this rapid movement of large amounts of money, there is the risk of not only the misuse of public funds, but also the erosion of public trust. The public needs to be reassured, with evidence, that decisions are being taken with caution and integrity, and that they are executed with the same care.

To this end, I would like to address three topics today: procurement, beneficial ownership transparency and economic recovery.

First, transparency in public procurement is fundamental to ensuring that goods are procured at a reasonable price and in a fair manner. While the pandemic can allow some measures to be expedited in a procurement process, these principles must remain.

While it took considerable public pressure for the government to release some pandemic-related data, such as Canada emergency wage subsidy recipients and vaccine distribution timetables, there is procurement spending data available—namely, on the Public Services and Procurement Canada website. This data is in the aggregate, though. Spending in different procurement categories and the recipients of the contracts are available, but there is no breakdown of how many contracts each party received. While the aggregate data is a start, TI Canada implores the government to go further and make successful contracts available. This is particularly important for the roughly $1 billon spent on Canada’s vaccine contracts.

The second point I would like to raise is on beneficial ownership transparency—that is, the transparency of the actual physical person who benefits from a company. We remind the committee that Canada received negative reviews from the financial action task force's 2015 mutual evaluation and is viewed by many experts and other bodies as a destination for money laundering. This makes it all the more important for the public to know who is actually benefiting from COVID procurement contracts.

TI Canada was pleased to provide commentary to the government’s public consultation on establishing a public registry of beneficial ownership last spring. A public registry would help Canada fight money laundering—or “snow washing”, as it's referred to. We have been waiting for one year, though, for the results of those consultations. While we understand that the pandemic monopolized much of the government’s attention, surely the consultation results should be released by now.

Corporate beneficial ownership transparency is just as urgent for Canada during the pandemic as it was before, perhaps even more so. Beneficial ownership disclosure should be a requirement for all government contracts, licences and permits so the government knows whom they are doing business with. A public registry can also help Canadians protect themselves from fraud such as fake job offers and fake medical supplies.

This leads to my third point: economic recovery. Anti-corruption and anti-money laundering compliance and, indeed, transparency and accountability measures cannot be paused as a means to economic recovery. Here again, a public beneficial ownership registry will help, especially as designated non-financial businesses and professions like real estate agents and money service businesses will be required to conduct beneficial ownership due diligence as of June this year.

In the mining sector, TI Canada has observed provincial governments citing the pandemic as a reason to fast-track public consultation processes for environmental assessments in an effort to speed up economic recovery. TI Canada recently assessed EA processes relating to mining in Ontario, B.C. and Yukon, and our findings were that public consultations are already less than adequate. More transparency is needed, not less, especially with Canadian jurisdictions eyeing rare earths for green tech as an engine of economic recovery.

The Government of Canada has had to react quickly, with unprecedented resources and powers, to meet the challenge of the COVID-19 pandemic. While perfection in the response may not be reasonable to expect, transparency in decision-making and adherence to accountability during and after the pandemic are in our view non-negotiable.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thanks very much, Mr. Cohen.

Ms. Morton, we will go to you to read your statement into the record, if you could.

[Victoria Morton]

Great. Let's try this again.

Hi. My name is Victoria Morton. I was an employee of WE Charity from November 2018 to June 2020. I began as a strategist on the business development team, and then joined the executive office in September 2019. As a strategist, I supported all revenue-generating teams—for example, corporate partnerships, donor engagement, retail and executive office. While in the executive office, I provided direct support for Craig Kielburger for major events and select meetings. Managing his social media became part of my role shortly before the pandemic hit, and became more of my responsibility afterwards, with a particular emphasis on building up his LinkedIn.

In a previous committee meeting, Craig referred to his EA sending LinkedIn connection requests from his account. My title at the time was manager of executive projects, but the tasks he referred to on March 15, 2021 were under my portfolio. While I don't specifically remember Ben Chin, I did draft and send about 100 LinkedIn connection requests from Craig's account with custom messages using information I gathered from several internal and external sources.

Please note that I was laid off in March 2020, at the same time most staff were, and then rehired about two weeks later on a two-month contract. During those two weeks, I applied to grad school, so I requested that the contract be made part-time. I was accepted into the grad program. From May until my departure, I was attending school full time and working part time at WE, still primarily supporting Craig. As the two-month contract came to an end, I was offered a renewal but decided to respectfully decline, to focus on my education. I returned my company laptop, which contained any contact lists and confidential documents, shortly after.

Long before becoming a staff member, I was involved with WE as a youth from about grade 8 to mid-high school. I credit this organization with helping first ignite what has become a lifelong passion for civic engagement. I've volunteered with many organizations unrelated to WE, including some that are partisan. I'd like to proactively disclose that I have been a volunteer for both the Ontario Liberal Party and the Liberal Party of Canada. Some of this overlapped with my time at WE, but it was always undertaken as a private individual outside of work hours. Neither WE nor anybody within the organization has ever pressured me into any partisan activities.

I was happy to accept the committee's invitation to answer any questions that I can, but please note that I did not work on the Canada student service grant program, WE Day talent contracts or WE Villages, nor did I have any insight into the organization's finances. Additionally, I won't be providing the names of any other staff members. I'm grateful for Craig's previous refusal to give my name to the committee out of respect for my privacy. This allowed me to voluntarily identify myself using my personal Twitter account. I extend the same courtesy to all past and present staff members.

I'm grateful for the role WE has played in my life as both a student and staff member. I continue to deeply respect the work they've done to advance service learning in classrooms and social entrepreneurship, which are two fields I remain particularly passionate about. Regardless of what the future of WE is, I hope that support for service learning and social entrepreneurship continues to grow within Canada and around the world.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. Morton.

Thank you to all the witnesses.

We'll start our six-minute rounds with Mrs. Jansen, followed by Mr. McLeod.

Mrs. Jansen, go ahead.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Thank you, Ms. Morton. With regard to your job doing Craig's LinkedIn, what was your exact last day in June?