Finance Committee on April 1st, 2021

[Pierre Poilievre, Conservative, Carleton, ON]

Are you aware of any contact between Mr. Kielburger and Margaret Trudeau, Sophie Trudeau, Katie Telford, Rick Theis or Bill Morneau between the months of March and the end of June 2020?

[Victoria Morton]

I have no visibility into that.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Fragiskatos, you will have to wrap it up. You have three minutes.

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

Thank you, Chair, and thank you to the witnesses.

This question goes to Ms. Demarcke and Mr. Paquet. It relates to tourism, obviously.

The Australian government recently put in place a spending measure intended to help areas of Australia that rely on tourism—around a dozen areas in the country. The way they're doing it is that they have $1 billion earmarked specifically to help reduce—in half, in fact—travel fares, so 800,000 Australians would have the ability to travel at half the price because of this subsidy.

I wonder how that might apply to Canada. [Technical difficulty—Editor] don't want to encourage travel now, but when it is safe to do so, do you think this is something that...? When I say “when it is safe to do so”, I mean when Canadians have received the vaccine and we see infection rates decline very dramatically. Do you think this is a way to help areas of the country that rely on [Technical difficulty—Editor] that the Canadian government should look at pursuing?

Ms. Demarcke, we can begin with you if you wish, and then maybe wrap it up with Mr. Paquet.

[Donna Lee Demarcke]

That would be an absolutely phenomenal initiative, if the federal government would take something like that on, especially if we were open to Canadian travel before international travel. We could start getting some Canadians moving around our country while we're waiting for international travel to come back to Canada again. It would be absolutely welcomed, and it would be a great program for tourism in our country.

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

In Australia, it is focused specifically on Australian citizens. It could be something interesting here to focus on Canadian citizens.

I would love to hear your view, Mr. Paquet.

[Éric Paquet]

We think it's a great idea. One of our recommendations in the document we submitted in the pre-consulting for the federal budget is to incent Canadians to travel across the country. It should focus primarily on transport, giving discounts on transport to help Canadians to travel. You could also even give free tickets to children under 12, so you incent families to travel and discover the country.

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

Well, one step at a time, but I take your point.

[Éric Paquet]

Yes, you know what I mean by that.

We think a program that's instant, where you see tangible benefits right away when you want to make a reservation, is something that could work well, including with different local programs in the country. It could be complementary to other local programs, and without the tourism companies cutting their margins. We think it would be a great program.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

I certainly want to thank all of the witnesses for coming forward today. Your experience and advice are valuable to us and, through us, hopefully to the Government of Canada as we move forward. The pandemic programs have rolled out quickly, and the government has shown a willingness to change them, so thank you all for your advice and your presentations and answering our questions.

With that, we will suspend for about three minutes and start with our next panel.

The meeting is suspended.

[The Chair, Liberal, Wayne Easter]

We will recall the meeting to order.

For the information of the witnesses, this is the second panel of meeting number 32 of the House of Commons Standing Committee on Finance. As you well know, we invited you as witnesses for the study of all aspects of COVID-19 spending and programs. We look forward to your testimony.

We'll start with the Association of Canadian Independent Travel Advisors.

I'm not sure who the witness is. I don't have you on my list. Is it Ms. Wilson?

[Judith Coates, Co-Founder, Association of Canadian Independent Travel Advisors]

It's me.

[The Chair, Liberal, Wayne Easter]

Okay, yes, we've met before, a number of us on Zoom.

[Judith Coates]

We have.

[The Chair, Liberal, Wayne Easter]

Go ahead, Judith. Welcome.

[Judith Coates]

It's nice to see you again, honourable Chair, and also committee members. Thank you so much for inviting us to present today.

We provided a PDF of our presentation, if you would like to follow along with that.

There are over 24,000 travel advisers in Canada, and half of us are independent travel advisers. What that means is that we are small business owners. We are self-employed and the majority of us are sole proprietors.

The two key pieces of information we want to give you at this point are that 100% of our revenue comes from the commissions we earn from our travel suppliers and that 85% of all travel advisers are female. We know that women have been the hardest hit in this pandemic, and our industry is no exception.

We have been told that we're all in the same boat, but we don't believe that's true. We believe we're all in the same storm, but in many different boats, and we believe that our boat is sinking much more rapidly than a lot of other boats out there.

Part of that is because of our delayed revenue stream. We're not like an industry that sells a product and gets paid a commission cheque the following month. In our line of work, it takes between five and 11 months from when a customer makes a booking of a trip until we actually get paid for the work we have done on that booking.

If we want to assume that travel restrictions would be lifted by the end of June, and if a client came and made a booking on July 1, we would not receive any revenue from that booking and the work we've done until as early as mid-November of this year, or, more realistically, as late as June 2022.

Our first reality is that we have been without revenue for one year. We know it's going to take five to 11 months from the resumption of travel before we start to see any revenue from future bookings.

We are asking the government for sector-specific aid, because we know that the CRB is not meant to be a long-term band-aid solution. There are other countries that are already in their second round of sector-specific aid for their travel advisers, and we believe that Canada needs to follow suit.

Here's another reality. Even though we have been hindered from earning any revenue, we are business owners. We have been continuing to operate our businesses and are as busy as ever, because we are supporting our clients. When they needed to be repatriated to Canada, we were there to do that for them. When they needed assistance with their cancellations, we were there to help them. As they have been issued their future travel vouchers, we have been processing those for them and we are continually reworking those files. As they have needed assistance with insurance claims, we have been busy providing that assistance.

Although we have been quite active in our businesses, the reality is that we are slipping through the cracks because, other than the CRB, only a very small percentage of independent travel advisers have been able to receive any funding from the federal government. The CRB was designed to put food on our table and help us pay the rent, not pay our business expenses.

There's another piece to our puzzle, and that is that we know the airlines need financial assistance. They are the backbone of our travel economy, and we need them to be financially viable. We also support the option of consumer refunds. However, in November, when the former transport minister announced that airlines would not receive any bailouts unless consumers were given refunds, there was a huge trickle-down effect. WestJet and WestJet Vacations, and then Air Transat and Transat Holidays issued notices to us saying that our clients would not receive a refund until we paid back the commissions that we, the travel advisers, earned on those bookings.

In some cases, those commissions were earned by us in 2019. They have already been taxed, and there's no way that we can pay them back, nor do we believe that we should be paying back those commissions, because they were revenue earned for services we provided to those large corporations.

We need assurances from the government that bailouts will only be given on the condition that travel advisers' commissions are protected. We're asking for the government to set up a fund in the amount of $200 million to facilitate this. Until travel restrictions are lifted, consumer confidence will remain low, and we believe that if the government is going to continue to impose these restrictions, aid must be given immediately to our sector.

We're asking for your support for commission protection, first of all, to ensure that bailouts will only be given on the condition that our commissions are protected. Commission clawbacks are forcing many travel advisers into bankruptcy.

The second thing we're asking for is sector-specific aid for independent travel advisers to help keep our businesses afloat. Please ensure that our businesses, and we, won't continue to fall through the cracks.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thanks very much, Ms. Coates.

With you, for support and backup on questions, is Brenda Slater, co-founder. I think people should understand that, not that long ago, this organization didn't exist. Also with you is Nancy Wilson, travel adviser.

Turning to the Canada Mortgage and Housing Corporation, we have Mr. Siddall, president and CEO. Welcome.

[Evan Siddall, President and Chief Executive Officer, Canada Mortgage and Housing Corporation]

Thank you, Mr. Chair.

I'm pleased to be here on behalf of the Canada Mortgage and Housing Corporation to update the committee on our response to the COVID-19 pandemic.

I am especially pleased that my presence today is my last official act as a federal public servant. The health of our democracy depends on the primacy of elected officials and our responsibility to you is at the heart of our duty of loyalty to Canada.

I am reminded of the eloquent words of admonishment delivered to Oliver North, after Mr. North had professed his patriotism and claimed a more intricate and nuanced ability to determine that country's national security as an excuse for lying to U.S. Congress. Senator Warren Rudman, a conservative Republican from New Hampshire, invoked the opening phrase of the U.S. constitution, “We the People”, to remind him of his error, and said, “Congress represents the people” and “the American people have the constitutional right to be wrong.”

In fact, steadfast respect for our democratic processes, including our parliamentary committees, is the foundation of our dominion of Canada.

Turning to today's business, I last appeared before the committee months ago—still relatively early in the pandemic—to explain how CMHC responded quickly to help stabilize the Canadian financial system and to support the economic well-being of households and small businesses.

As you know, CMHC distinguished itself in its rapid response, launching multiple initiatives to support Canadians. In addition to hundreds of interventions on behalf of our individual housing provider clients, the principal policy measures we took were as follows.

We relaunched the insured mortgage purchase program with $150 billion of strength in co-ordination with the Bank of Canada's several liquidity measures, together to help ensure that banks would have access to reliable funding and keep housing markets functioning.

However, we also removed a prior implicit pricing discount in the prior IMPP dating from the global financial crisis, eliminating any suggestion that CMHC, or the Government of Canada, was subsidizing lending. It is a tenet of emergency support measures that they require more expensive emergency pricing.

We also coordinated with lenders and private mortgage insurers to allow Canadian homeowners impacted by the pandemic to defer mortgage payments for up to six months, which nearly one-fifth of mortgage holders made use of. The same relief was made available to our multi-unit clients to facilitate rent relief for their lower-income tenants.

Additionally, speaking of rent relief, we were asked to administer the Canada emergency commercial rent assistance for small businesses, lowering rent by at least 75% for more than 140,000 small businesses experiencing financial hardship due to the pandemic. That program has been superseded, as you know, by the Canada emergency rent subsidy, now administered by the Canada Revenue Agency.

At my last appearance, I repeated our economists' warning about a potential fall in house prices. Needless to say, we got that wrong. You may recall, however, that those were more uncertain times and people may not appreciate the ugly scenarios we were considering in our responsibilities as managers of systemic risk. The 18% decline level—the outside number that we used—was clearly identified as a worst-case scenario that we then described as very unlikely. However, our 9% decline warning did not take into account four significant factors.

First, there were the compositional or “mix” changes that inflate apparent price appreciation when a larger quantity of higher-priced homes are traded in one period versus another. Second was the full impact of low interest rates and other monetary policy changes. Third was the scope and scale of government support programs, and the extent to which these have delayed inevitable economic adjustments, including resulting potential unemployment. Finally, fourth was the behavioural and psychological effects of the foregoing on both where people would choose to live and just how much froth this would all create in housing markets.

I will say that I am very concerned about the state of current housing markets in Canada and the resulting potential impacts on our future economic growth, on the environment, from more people driving cars to get home, and on increasing levels of inequality. Homeowners have had windfall gains on housing while renters have fallen further behind during a pandemic that has already hit them harder. So-called extrapolative expectations—what my son would call “FOMO” or fear of missing out—are evident and signal a market that's become detached from economic fundamentals.

Since my appearance last spring, we have continued to focus our energies on helping Canadians navigate this crisis and position the economy for a rapid and strong recovery.

In July, we revised our underwriting policies for insured mortgages to protect future homebuyers, reduce risk and support stable housing markets. In doing so, we have chosen the health of our financial system over our commercial interests.

However, whereas our banks are safe, homeowners are not. We therefore continue to defend the stress test and 25-year amortization limits, measures that have protected homebuyers and our economy and restrained house price gains. Prices would have been even higher without these measures—our version of taking away the punch bowl so the party doesn't get too loud, as I once described it to this committee.

Demand measures aside, we've also continued to deliver a range of housing programs under the national housing strategy to increase housing supply, making housing more affordable and ensuring that Canadians continue to have the sanctuary of a home when it is needed most.

In October, we launched the rapid housing initiative, a $1-billion program to address the urgent housing needs of Canadians made vulnerable, especially those experiencing homelessness in the context of COVID-19. Our initial estimate was that about $1 billion of our RHI funding would support the construction of up to 3,000 new affordable homes. As Minister Hussen recently announced, we surpassed this goal. The program will support the construction of 4,777 homes, of which over 1,800 are for indigenous people.

The federal government's fall economic statement 2020 has also given new impetus to Canada's housing system. The rental construction funding initiative will be increased by $12 billion to $25.75 billion, 10 times the initial size of the program, starting in 2021. This new loan through a demonstrably successful program will support the construction of 28,500 additional rental units over a seven-year period.

The COVID-19 pandemic has made more apparent than ever the importance of having a safe place to take shelter and reinforced CMHC's resolve to realize our aspiration that by 2030, everyone in Canada has a home that they can afford and that meets their needs.

In closing, I'd like to thank the 2,200 people of our company who have transformed it into a housing policy and program implementation machine and a place that does things right, even including a massive IT transformation. The CMHC of today is client-centric, purpose-driven, innovative, inclusive and a resilient place in which Canadians can have confidence. It has been a privilege and the single greatest chapter in my career to have served our country alongside them.

Thank you again for the opportunity to be here on my last day as CEO of CMHC. I look forward to answering all your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Siddall.

I have a message for Dan Clement, who's with United Way.

Dan, I don't know if there are problems with your mike or not, but the translators asked if you could send your opening remarks through to the clerk. It would assist them with translation, I gather.

[Dan Clement, President and Chief Executive Officer, United Way Centraide Canada]

Yes. Thanks.

[The Chair, Liberal, Wayne Easter]

We're turning, then, to the Fédération nationale des communications et de la culture, with Ms. St-Onge, president, and Julien Laflamme, coordinator.

Go ahead, Ms. St-Onge.

[Pascale St-Onge, President, Fédération nationale des communications et de la culture]

Mr. Chair, ladies and gentlemen, good afternoon.

First, thank you very much for giving us the opportunity to speak about your work on emergency measures during the pandemic.

The Fédération nationale des communications et de la culture, or FNCC, represents approximately 6,000 members in 80 unions. The federation also works closely with cultural unions, including the Union des artistes, the Quebec Musicians' Guild and the Association des réalisateurs et réalisatrices du Québec, to name but a few.

Together, our organizations represent more than 25,000 workers in the media, arts and culture. The FNCC represents both salaried and self-employed workers. Two weeks ago, the FNCC and its partners published a new and very troubling report on the situation of self-employed workers in the cultural sector. In short, the precarious situation that artists, creators and tradespeople in the cultural sector have faced for many decades, combined with the shutdown or increased complexity of activities resulting from the pandemic, has left our members in psychological and financial distress.

Of course, the living arts have been particularly affected by the health measures and closures. However, the entire cultural sector has been severely shaken. Now, just as venues have reopened in Quebec, it seems that we are entering a third wave.

I must point out that the average annual income of self-employed cultural workers doesn't exceed the low-income cutoff for a single person in Quebec. In 2017, this cutoff was $24,220. In 2019, none of the cultural activity areas reached this cutoff, not even the film and video industry.

This precarious financial situation and the weak social safety net available to self-employed workers make them very vulnerable during crises and slumps, which is the case for most of them. When surveyed between December and January, 64% of our members showed signs of high or very high psychological distress. This cannot continue. In this survey, we asked our members what they thought their net income would be in 2020, just from their work in the arts. Sixty-three per cent of the 1,500 respondents indicated that their net income would be less than $10,000, while 15% indicated that it would be less than $19,000. Also, over 40% of the members we surveyed are considering leaving the cultural sector.

Based on these data, we can make a few observations. First, 67% of our self-employed members have received the Canada emergency response benefit (CERB). Without it, many would have ended up with nothing to pay for their rent and food. This measure was most appropriate in providing direct help to cultural workers. Second, only 34% of cultural workers registered for the Canada recovery benefit (CRB). There appear to be a number of reasons for this drastic decline, including the fact that certain criteria, such as a job search, which was required even when the entertainment industry was still shut down, are not realistic in the cultural sector. Also, because of the fear of having to pay money back, when few of them have any savings, many don't take the risk. That being the case, the CRB should be extended for as long as this crisis lasts, and ideally, the administrative burden should be minimized to facilitate access.

Finally, apart from the CERB and, to a lesser extent, the CRB, few programs have reached artists, creators and tradespeople directly. A social safety net is needed for self-employed workers for whom intermittent work is part of the trade or profession. It is absolutely necessary to introduce an income replacement mechanism, without which it will be very difficult to remedy the precarious position of our artists and tradespeople. Need we remind you that without them, there is no culture? Improving the socio-economic living conditions of self-employed cultural workers must be a priority in all the measures that governments are considering.

As for the specific support programs for culture, such as the National Film Board, Telefilm Canada or the Canada Council for the Arts, generally speaking, these funds have been neglected and very rarely indexed for decades, which means that the entire sector was already in a difficult financial situation, and even more so for francophone content. Of course, the money is helping the sector, but it will need a lot of support in the coming years.

In closing, I'd like to take a few seconds to talk about the media sector. We reiterate the importance of placing government-wide advertising first and foremost in our Canadian media, whether in our newspapers or magazines, on television, radio or digital media. This sector was already severely disrupted by the fiscal, legislative and regulatory inequities that exist between them and the web giants.

The government must do everything it can to protect professional journalistic information, especially during these times of pandemic and misinformation, as well as our original cultural production, given that Canadians are spending more time than ever in front of screens.

The wage subsidy has also helped many media companies maintain jobs. It should also be extended for as long as necessary.

Mr. Laflamme and I would be pleased to answer your questions.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. St-Onge.

To give members a heads-up on the speaking order on questions, we'll start with Mr. Poilievre, and then it will be Ms. Koutrakis, Mr. Ste-Marie and Mr. Johns.

Ed Fast, my system is a little unstable here. If you lose me, you may have to take over as chair. It's been down a couple of times, so just keep that in mind.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Chair, I think Pat is vice-chair.