Finance Committee on April 15th, 2021

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome to meeting number 34 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 the 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.

The proceedings will be made available via the House of Commons website.

Before I turn to witnesses, I believe Mr. Kelly had a point or a motion he wanted to make. Pat, the floor is yours, and then we'll go to witnesses.

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

Thank you, Mr. Chair.

I have a comment first, and I do have a motion to put on notice.

I was disappointed in the last-minute cancellation of one of our first panel witnesses, Generation Squeeze. I don't know if it was a sudden unavoidable time conflict on their side or if they had other reasons to decide at the last moment not to appear.

Further to that, I now put this motion on notice. The motion is as follows: “That the committee hold one three-hour meeting consisting of two 1.5-hour panels, including Andrew Cowan and Steffan Jones of the CMHC in one panel and Eric Swanson of Generation Squeeze and Charlie Ursell of Watershed Partners in a second panel, to testify about the study entitled “Wealth and the Problem of Housing Inequity across Generations in Canada”; and, that opening statements for the meeting be limited to five minutes per panel.”

[The Chair, Liberal, Wayne Easter]

That's a notice of motion, then, Mr. Kelly. We can pull it off the table at any point and send it to the clerk. It will get translated and sent to all members.

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

I think we had it translated. It will be with the clerk momentarily, if it's not already there.

[The Chair, Liberal, Wayne Easter]

Okay, good.

[Julie Dzerowicz, Liberal, Davenport, ON]

Mr. Chair, I have a point of information.

[The Chair, Liberal, Wayne Easter]

Go ahead.

[Julie Dzerowicz, Liberal, Davenport, ON]

Is this first panel a one-hour session or is it an hour and a half?

[The Chair, Liberal, Wayne Easter]

It will be about an hour and 10 minutes. We want to start the second panel at five o'clock.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

That's an hour and 12 minutes.

On Generation Squeeze, I understand they were in and they were out, and they were in and they were out. We can ask the clerk to give the reasons, if he wants. Was any reason given, Mr. Clerk?

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

The email didn't give a specific reason, but the witness did say he would like to wait until the budget came out to have more content for his presentation.

[The Chair, Liberal, Wayne Easter]

All right. That's fine. There's not much we can do with that.

We'll start with the witnesses. We'll begin with Air Passenger Rights and Dr. Lukács, who is president.

Please hold it to about five minutes, and then we can go from there. The floor is yours.

[Dr. Gábor Lukács, President, Air Passenger Rights]

Mr. Chair and honourable members, thank you for the privilege to be here today.

Air Passenger Rights is Canada's independent non-profit organization of volunteers devoted to empowering travellers. We take no government or business funding and we have no business interest in the travel industry. We speak for passengers, whom we help daily in their struggle to enforce their rights. We also recognize that the aviation sector is important not only to passengers but also to aviation workers, who have also experienced considerable hardship over the past year.

The pandemic brought to the forefront systemic issues that have plagued the aviation sector for nearly a decade: airlines not respecting, and the government not enforcing, passenger rights. The refund controversy exemplifies these anomalies. It is a cornerstone of every transaction that if the consumer does not receive the goods or services they paid for in advance, the vendor must refund all monies paid.

Air travel is no different. Passengers have a right to a refund for flights cancelled by an airline, even if the reason is outside the carrier's control. In 2013, this was coined a “fundamental right” by the federal regulator, yet since March 2020, we have witnessed an unprecedented assault on passengers' private property and the collapse of consumer protection in Canada. Airlines whose revenues were decimated by the pandemic have helped themselves to passengers' money and pocketed airfares paid in advance without providing any services in return.

For more than a year now, the government has taken no enforcement action against airlines that have violated passengers' fundamental right to a refund for flights the airlines cancelled. Instead, the government has turned passengers' legal right to a refund into a bargaining chip in bailout negotiations.

This was wrong. First, in a democracy, the laws must be enforced against citizens and corporations alike. Otherwise, we risk creating a two-tiered society in which, as George Orwell put it, “all animals are equal but some animals are more equal than others.” Second, the failure to force airlines to promptly give refunds to passengers has undermined consumer confidence and goodwill, which are the lifeblood of the entire travel industry.

The Air Canada bailout suffers from the same flaws. It lacks any enforcement mechanism to ensure that passengers are indeed refunded. Instead of getting Air Canada's shareholders, who previously reaped profits, to foot the bill for refunds, it is taxpayers who must.

The bulk of the bailout is in the form of unsecured loans. This means that no assets can be seized if Air Canada is unable to repay the loan. Unsecured loans tend to become grants. Also, taxpayers assume only a token 6% equity stake in Air Canada. For comparison, Germany took a 20% stake in Lufthansa.

In addition, the sweetheart deal with Air Canada skews the market and undermines fair competition. This has nothing to say about Sunwing, WestJet, Porter and other airlines whose passengers are also waiting for refunds.

The Air Canada bailout is not only a bad deal; it also overlooks that it is not possible to cure the aviation sector's chronic illness by throwing billions of dollars at the current symptoms.

Air Canada's new refund policy is an example in point. On April 13, hours after the bailout was announced, Air Canada added to its terms and conditions an exception to its obligation to refund passengers for cancelled flights. The purpose of the exception is to legitimize refusing to refund airfares in the event of a new wave or a new pandemic.

It is unclear whether Deputy Prime Minister Freeland and Transport Minister Alghabra were aware of Air Canada's plan to add this exception or whether they were misled. Either way, Canadian taxpayers were shortchanged. They paid billions of dollars, but the systemic issues of lack of consumer protection have just gotten worse.

Addressing these systemic issues is a vital interest of passengers, aviation workers, travel agents and the entire travel industry. Consumers will pay for services in advance only if they have confidence that they will receive the services they paid for or, if the services are not provided, receive a full refund of their hard-earned money. If Canada provides no such assurances, consumers will take their business elsewhere, to airlines based in jurisdictions that do offer such guarantees, such as the U.S. or the EU.

Canada therefore needs declaratory legislation, such as Bill C-249, to protect passengers' rights to a refund and to restore consumer confidence. In the absence of such legislation, no amount of taxpayers' money will save our travel industry.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Dr. Lukács. You were under five minutes.

We'll turn now to Colleen Cameron, chair of the board of directors, Antigonish Affordable Housing Society.

[Colleen Cameron, Chair of Board of Directors, Antigonish Affordable Housing Society]

Thank you very much, and thank you for this invitation to speak to this committee. I am very privileged to be able to do that.

To tell you who we are, the Antigonish Affordable Housing Society has been in existence since 1993 as a non-profit organization. We received our charitable status in 2014. Since then, we've been working very hard. We opened up four units in 2017. We had to do it in two phases because we couldn't secure the finances for the whole thing, and then the following year, we opened up another 10 units. We have 14 units of affordable housing that are high quality and energy-efficient. Four of those are barrier-free units.

Since then, we've been working to secure financing for the second complex that we're building, which is 12 units. It's directly across the street from elementary and junior schools—a very good location. Again, we've been struggling to get the financing for that. We planned on 15 units; we're going for 12. We've started and hope to sign off, finally, in the next week or so. We've started, and we hope by the end of the year to have these units open. This is very much needed in Antigonish, which is a small university town with very high rents. It provides a much-needed avenue for people to access affordable housing.

Our vision is to be environmentally, socially and financially sustainable while providing community-supported affordable housing to the residents of the Antigonish town and county. We develop and research new opportunities for affordable housing. Our vision and mission are based on our values of respect and dignity for all people and our understanding that access to good-quality, affordable housing is a basic human right.

That's who we are and what we are doing.

COVID-19 had quite a significant effect on the organization as well as on the tenants who live in our units. For the tenants themselves, stress was a major issue, and I think that's been known all across the country. COVID has increased stress for many people. A couple of our tenants actually had mental illness crises during that time. Fortunately, because we put such a focus on social sustainability, we have in place, in our unique model, a community navigator who is there to support the tenants in accessing resources and supports in the community. We were well positioned when COVID hit to be able to support the tenants in that way.

I must say that we very much appreciated the support we received through the emergency community support fund. With that $2,000 funding we received, which was distributed by the United Way in Pictou County, we were able to provide tenants with masks, hand sanitizers and bus passes.

For your information, some of the masks were purchased from a newcomer Syrian refugee who set up a new tailoring business, so that funding supported a new local business. The bus passes that are very much needed are also supporting the Antigonish Community Transit. That small amount of money was well used and also put much-needed cash into the local community.

As an organization, our fiscal year ends at the end of March. In 2020, we experienced a $20,000 decrease in our revenue from donations and fundraising as a direct result of COVID. We were very pleased to receive the Canadian emergency benefit account loan of $40,000. This loan was very helpful in covering some of our operating costs for that fiscal year, which just ended, and will continue to assist us in our operating costs for this fiscal year.

In December we applied for increased funding in the amount of $20,000. We still haven't received that yet. It seems as if our financial institution is having trouble obtaining these funds. Supposedly it's on the credit union end and not the government end. We're hoping to be able to access that soon.

Again in May 2020 we applied for the Canada emergency wage subsidy. This has been very useful in our program to help address some of the effects of the drop in revenue.

Overall, these programs have been beneficial for us. As a charitable non-profit community organization, we depend on fundraising and charitable donations to cover some of our operating expenses—most importantly, the role of the community navigator. This is very important, in our mind, for sustainable affordable housing. Having our navigator in place before COVID hit put us in a good position to assist the tenants during COVID when they were experiencing high stress levels. Accessing these funds was not a big challenge, which was a pleasant surprise for us. In the business of looking for funds, it often is a challenge.

This past year it became very apparent that many people in our society were living in precarious positions that were exacerbated by the pandemic. We had an increased number of callers desperately looking for affordable housing. COVID really exposed the financial and social gaps in our society, which really cannot be ignored anymore. As we think about preparing for any future pandemics, whether COVID or something else, we really need to build a resilient community. As the emergency programs helped mitigate some of these negative effects of COVID, I would suggest now that government programs need to be geared towards building resilient communities for the next emergency pandemics that are going to be hitting us.

To build resilient communities, you have to have healthy people. By “healthy”, I mean mentally, physically and socially healthy. They are more resilient to shocks and stresses and contribute to building resilient communities. Addressing the social determinants of health through an equity lens is a requirement for people and communities to be healthy.

Ensuring everyone has access to quality, accessible and affordable housing is also part of a resilient community. I would suggest that there needs to be a re-examination of the national housing strategy, which we are pleased to have, in improving access to the programs and ensuring organizations like ours have access to them. We have been working on this for 18 months now. It requires a huge amount of time and skill. When I think of all the people who put in time and expertise from our side and from the other side, it was a lot of money that would have been spent on that.

[The Chair, Liberal, Wayne Easter]

I wonder, Colleen, if you can wrap it up fairly quickly.

[Colleen Cameron]

Yes.

[The Chair, Liberal, Wayne Easter]

We're running a little over time.

[Colleen Cameron]

The last sentence I have is to ensure that everyone has access to a livable income. That will make the greatest difference in building a resilient community.

On that note, I will end by thanking you for this opportunity to contribute to this study on COVID expenses and programs.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

As for the lineup for questions—and we'll go with our regular six-minute round—first will be Mr. Falk, and then Mr. Fraser, Mr. Ste-Marie and Mr. Masse.

Colleen, I've never heard tell of a community navigator before. That's an interesting concept. I think we could use one in a few places.

Ted, the floor is yours.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chairman, and thank you for your patience with me. I'm scheduled to make a speech in the House, and I was just resolving that conflict.

Thank you to both our witnesses, Ms. Cameron and Mr. Lukács. I'm going to be directing most of my questions to Mr. Lukács.

Thank you for your presentation. I think I've had the privilege of listening to you once before on what you do for passengers' rights. It's always very interesting and informative.

You talked about the bailout that was given to Air Canada recently. It's interesting that it's been reported just recently that in this new language that was added to its terms and conditions, they gave themselves the legal right to refuse future refunds to passengers, and I think you touched on that. This comes exactly on the heels of the federal government providing the $6-billion bailout.

You've indicated your reaction a bit. Why do you think they missed that in their negotiations?

[Dr. Gábor Lukács]

That's a very troubling question.

The legal validity of that contractual provision, of course, would have to be determined by a judge. We have some serious doubts about whether any vendor or business can contract out the obligation to refund its customers in the event a service cannot be delivered. Even if it is a war, a pandemic or the sky is falling, it doesn't matter. There is a fundamental right for all consumers, in all contracts, to get back their money when they don't get the goods or services they paid for.

Setting that aside, the short answer is that Air Canada is doing this because it can, because the government is not taking action, is not taking enforcement steps against airlines that disregard passengers' rights.

With respect to Air Canada, the Canadian Transportation Agency could disallow the tariff provision tomorrow. The CTA wouldn't even need a complaint from us; it could simply look at it and say that this is an unreasonable term and condition, especially since Air Canada has gone public and made broad public statements to the contrary. Air Canada assured the public through its press releases that from now on, for tickets that are purchased, it would refund passengers if a flight is cancelled, regardless of the reasons. Air Canada is talking out of both sides of its mouth, and we haven't seen yet any enforcement action.

[Ted Falk, Conservative, Provencher, MB]

You also talked about the potential unfairness of providing a bailout for one airline while leaving others trailing in the distance. You mentioned WestJet, Sunwing, Air Transat and Porter.

Recently the federal government also gave the provinces money to distribute to northern and indigenous service providers in the airline industry. My province of Manitoba received $12 million from the federal government to distribute to scheduled airline service providers that service the north and indigenous communities. The problem is that we have airline operators like Wings Over Kississing that service the exact same communities as the scheduled service carriers, often competing for the same businesses, but they got zero support.

In fact, in Manitoba, two airlines in particular, Calm Air and Perimeter, received $9 million of the $12 million, whereas Kississing, which is about a third of the size of Perimeter, received absolutely nothing.

I know you're as concerned for the employees and operators of small airlines as you are for passengers. Can you comment on that situation?

[Dr. Gábor Lukács]

We are not sufficiently familiar with the exact details of those specific carriers, However, generally, Canada needs a competitive airline sector. We would like to ensure that it is not a monopoly or a duopoly on any route. There are a number of airlines that are all competing for consumers. The competition should be on a level playing field.