Finance Committee on April 13th, 2021

[Dr. Trevin Stratton]

Yes, I do.

First of all, even though we see business investment going up in the short term, it's because of increased demand. The key to attracting foreign and domestic investment over the medium or longer term will be, instead of having people invest in Canada because consumer demand is going up, having them invest in Canada because the investment conditions are competitive compared with those anywhere else that they can put their money.

Certainly this has to do with policies that can have the greatest return on investment for businesses, including regulatory policy, including tax policy, including infrastructure spending, and obviously including the skills and talent in our workforce.

[The Chair, Liberal, Wayne Easter]

We have Mr. Fraser, followed by Mr. Ste-Marie and Mr. Johns.

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

My question is for Ms. Drigola.

I love it when witnesses start by saying “the one thing you can do” and then tell us what the one thing we can do is, which is to keep emergency programs in place.

Mr. Stratton referred to the phenomenon of economic scarring, which has been front of mind for us from the very beginning. I'm curious as to whether you can offer perspective into what kind of economic landscape we might have been dealing with, had the government not intervened to put forward measures such as the wage subsidy, such as CEBA and such as CERB in some instances, at the outset of this pandemic.

What would the world we're living in look like in the absence of those benefits?

[Alla Drigola]

That's a great question.

We would have seen many more businesses struggling or closing and many more jobs lost. As Trevin said, from the beginning we commend the government for introducing these programs quickly and making them widely available to businesses. We've seen that more than 50% of small businesses have accessed CEBA and CEWS. The numbers are very significant. Without these programs and those supports, we would have seen unemployment numbers that were much larger, with businesses closing.

That being said, this is why today we're calling for these programs to be extended and for businesses to have the certainty that those programs will still be in place past June. We're in the third lockdown now. Many businesses in Ontario have been shut—especially restaurants, for example—since the fall. We really need to make sure that these programs remain in place and that they are still there for businesses that need them, because without them I think we're going to see a lot more devastating consequences.

[Sean Fraser, Liberal, Central Nova, NS]

For what it's worth, between the last panel and this one I received a call from the executive director of a local performing arts centre who works with the arts industry right across Canada, who said precisely the same thing.

Mr. Chair, I don't want to encroach upon my colleague. I'm splitting my time, so maybe I should call it there.

[The Chair, Liberal, Wayne Easter]

Mr. Fragiskatos, you have three minutes.

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

Thank you very much, Mr. Chair.

Since we are splitting I don't think I have much time, so I will ask this to Mr. Stratton.

Ms. Dzerowicz spoke about the importance of interprovincial trade barriers as they exist and the negative impact they continue to have on the Canadian economy.

Do you think this committee ought to take the opportunity at some future point, Mr. Stratton, to study those barriers further and provide recommendations directly to the government on how they can best be overcome?

[Dr. Trevin Stratton]

No. Our position has always been that even though this might be a jurisdictional provincial-territorial issue, many businesses are looking for national leadership on the reduction of interprovincial trade barriers.

Certainly, studying what barriers might exist and what might be the way to reduce them—not only including what we traditionally think about as interprovincial trade barriers, but also labour market barriers—would, I think, be appreciated, and the Canadian Chamber would be happy to participate in such a study.

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

I look forward to that.

In a very collegial way, Mr. Chair, through you, I tell my Conservative colleagues to get on board with this—at a future point, of course, once we've reviewed the COVID issues we've been wrestling with at the committee. This is something the committee should really delve into. I thank my colleague, Ms. Dzerowicz, for initially raising the idea recently.

Mr. Chair, do I have time for more?

[The Chair, Liberal, Wayne Easter]

You have one more question.

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

Maybe I will stick with the chamber, whether it's Ms. Drigola or Mr. Stratton. Could you go a bit more into your focus on productivity? I thought that was really interesting. Mr. Fast raised a question relating to that, but it's good to get it further on record.

If I understand your argument, you expect the pent-up demand that exists, that is sitting there post-pandemic, will be unleashed to lead to enormous growth in the Canadian economy. Your focus and call to attention is on productivity, but what does that look like? How can the government best support that? Is it by investing in R and D? Is it investing in...? Fill in the blanks for me. What exactly do you mean when you say “productivity”?

[Dr. Trevin Stratton]

In terms of government investments, certainly there are some things that can help with that: like I mentioned, investments in broadband infrastructure, for instance, enhancing productivity over the longer term, and also economic opportunity.

There are certainly other things that could be useful that don't even have to do with government investments or spending. Looking at a review of the SR and ED program to be able to really spur our scientific research and development going forward would be a great way to do it.

Looking at how we might alleviate some of the tax burdens temporarily, and then, of course, tax competitiveness over the longer term, specifically for small businesses to actually encourage that investment, or productivity-enhancing technologies or skills going forward would be other ways to do it.

There are a lot of different policy measures that don't only have to do with spending but also have to do with other aspects of economic policy too. We have definitely made some submissions when it comes to the budget regarding that.

[The Chair, Liberal, Wayne Easter]

Thank you. You might even throw in regulations, I suppose.

We'll go to one question each from Mr. Ste-Marie, Mr. Johns and Ms. Jansen.

We have a hard stop at 6:30 Ottawa time.

Mr. Ste-Marie.

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

Thank you, Mr. Chair.

My question is for the representatives of the Canadian Chamber of Commerce and the Canadian Women's Chamber of Commerce.

We know that the pandemic has been a major blow to businesses and that consumer habits have rapidly shifted to e-commerce. This situation mainly benefits the web giants, and sales taxes still aren't being collected by the Canadian government. These giants don't have to pay taxes or royalties on their revenue. The government had promised to tax them, but it hasn't done so in the past year.

Have your members commented on this matter? Are they outraged by this situation and, if so, to what extent?

[The Chair, Liberal, Wayne Easter]

Who is taking that, Ms. Wilson or Ms. Mutch?

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

My question was for the representatives of the Canadian Chamber of Commerce and the Canadian Women's Chamber of Commerce.

[Nancy Wilson]

I'll turn this over to the Canadian Chamber of Commerce. There are not a lot of women who own tech giants.

[The Chair, Liberal, Wayne Easter]

Okay, Mr. Stratton, it's over to you.

[Dr. Trevin Stratton]

Sorry, can you just repeat the question?

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

Your members have been hit hard economically this year, while web giants such as Amazon take up an increasing share of the market. In addition, the federal government still isn't levying any taxes on their sales. Has this situation caused outrage among your members?

[Dr. Trevin Stratton]

There has definitely been an increase in e-commerce during the pandemic. Many small businesses have also been able to adapt in doing this too: small businesses of all types, and those in rural communities as well, which are being able to access customers and markets that might not previously have been possible.

Going forward, certainly the increased digitalization of small businesses is going to be very important, but it's also important to keep in mind that some of those businesses in the hardest-hit sectors really rely on a physical presence for their business models to work, so that might not be an option for them. That's going to be very important too.

Certainly when it comes to the taxation of technology companies, we have been in favour of a digital sales tax in Canada for quite some time, and that could certainly help with this situation.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll go to Mr. Johns for a single question, followed by Ms. Jansen for the same.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thanks.

Ms. Wilson, you talked about the challenges that many of your members are facing around liquidity—and access, actually, to all the programs, but specifically to liquidity—and being able to access the CEBA loan program.

Do you support and believe that program needs to be expanded to $80,000 and the loan repayment date changed to later than next year? Also, do you think there should be a micro kind of structure of that program, for those who can't access it?

[Nancy Wilson]

I'm going to let my colleague PK address this question around debt.

[Petra Kassün-Mutch, Board Member, Canadian Women's Chamber of Commerce]

Thank you very much, Nancy.

As an entrepreneur, I can answer that question by saying that I think extending the repayment and offering larger opportunities is a good thing. However, the reality is that most women entrepreneurs don't have the kind of credit facility, rating or net worth to be able to access some of those funds, because at the creditor or bank level, you are still asked to personally guarantee these loans. You're still on the hook for it.

Many of the entrepreneurs we see are reluctant. They would love to be able to leverage that, but I work in a number of different entrepreneurship spaces in the ecosystem and I know so many who simply tried and could not get access to it, or are reluctant because they're not sure. That's especially the case for early-stage businesses.

I've run both. I've had an established one and a start-up. In my established business world, I would have been able to predict what the change in demand and all of that would have been, and my ability to repay. However, in a start-up, where you're still spending on innovation, market-building and community-building, you don't actually know whether you are going to be able to repay that money in three or four years, because you're still at that stage of placing a bet.

I'll stop there just by saying that I think we need to reframe and reconsider how we support entrepreneurs, especially women, who tend to have less of a net-worth balance sheet for a host of reasons, like pay equity gaps and so on. How do we help those women entrepreneurs get access to these funds, given that we still are relying on traditional creditor criteria?