Finance Committee on April 15th, 2021

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

Thank you very much. It's an interesting point.

Economically, this downturn has taken a different form. It's fair to say that it is not quite like economic downturns of the past and therefore requires some creative thinking and pointing towards anything that will boost productivity and competitiveness. We've just given some examples here. I'm sure we could list many more. Your point is well taken.

Mr. Hemmings, I remember about a year or a year and a half ago, when the emergency programs were being put in place and being refined, some of my friends in the opposition and some in the media were saying that the government was doing too much and that the government should hold back. They were more or less making an argument for austerity, in many ways, although they did not use the word.

I wonder what your thoughts would be if we just imagined for a moment that the federal government did not introduce emergency programs or if they had been much more restrained in nature. The programs that have been introduced have been generous and have held up the Canadian economy, in my view. We've heard that same view articulated here from experts who have testified in recent weeks and months.

What is your view? If the Canadian government had not put in place the various emergency programs, where would the country be right now?

[Philip Hemmings]

You'd have a lot of households struggling, compared to the way you are now.

In the situation that governments faced in March and April last year, there was a high degree of uncertainty. Many governments, including the Canadian government, were trying to think of ways of supporting households and businesses in a very rapidly evolving situation. Canada was on the right side of the equation in the sense that it moved quickly. It moved quite boldly with support programs. It's quite possible that with hindsight, you can look at the programs. This is not only true for Canada; elsewhere, some of these emergency programs didn't hit the targets as accurately as good programs would. The point was expediency at the time.

You have the fiscal room to do this. You're on the—

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

I'm sorry to interrupt you, Mr. Hemmings, but I only have a minute left. You said something there that's very interesting to me—that Canada had the fiscal room to do this. Could you expand on that?

[Philip Hemmings]

Your public debt burden is relatively low compared to many other OECD countries, and borrowing costs are fairly low. In a way, this is partly why in good times, it's good to be aiming for creating that kind of fiscal space. It's to deal with situations such as this one so that you can, for instance, increase your debt-to-GDP ratio in a short space of time by, say, 15 percentage points. You can do it, and you still haven't got an astronomical debt burden.

It comes back to the point that when the economy is back on an even keel, there should be attention to bringing things back down under control so that you're ready for the next thing that we hope won't happen.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there.

We will go to Mr. Ste-Marie, followed by Mr. Masse.

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

Thank you, Mr. Chair.

Good morning to you all. I thank you for being here and for your presentations.

My first questions will be directed to Mr. Létourneau.

First of all, thank you for your statement.

You have stressed the importance of maintaining subsidies for workers in the cultural, hospitality and tourism sectors, which have been hit hard. We understand that this must be done as long as the pandemic lasts.

You also emphasized the importance of Ottawa adequately funding health. This echoes studies by the Parliamentary Budget Officer and the Conference Board of Canada, which point to the debt levels of the provinces and show that they will eventually be unable to sustain their spending levels. So Ottawa has to play a role in that.

Also, you talked about the importance of doing a thorough reform of employment insurance. This echoes, among other things, what former Bank of Canada Governor Poloz said to this committee, that the system collapsed as soon as the pandemic began. It is important to have good coverage for atypical and self-employed seasonal workers.

Of course, there's also Davie.

Finally, you spoke of the green stimulus. In the United States, there is a debate about the need for the Biden administration's $1.9-trillion stimulus package. That program has echoes here as well. Next Monday, Ms. Freeland will present her budget to us, and she told us last fall that it would include a stimulus package of $70 billion to $100 billion.

Feel free to address the other topics I mentioned, but I'd like you to elaborate on your expectations for the stimulus package that is to be announced.

[Jacques Létourneau]

I think an infrastructure program is an important part of economic recovery, of course. At the same time, I think the OECD, the IMF, and even the UN mention very clearly that we need to take advantage of the crisis to move in a different direction. In my opinion, Canada must stop actively supporting the hydrocarbon sector. It is clear to us that if we want to build Canada differently and put economic development in a sustainable development perspective, we must make other choices.

I would say that we also need to focus on service sector jobs. As I mentioned with Davie Shipbuilding, we need to position the manufacturing and industrial sector, which is important, but we also need to make sure that the entire service sector is supported.

I would like to pick up on what Ms. Baker said in response to Mr. Falk's question. Tourism, culture and hospitality are important sectors. As we know, they will unfortunately not be able to be revived as we would have liked during the next summer season. These sectors rely on skilled workers. When you support businesses and workers, you ensure the sustainability of the workforce.

In Quebec, as elsewhere in Canada, there is currently a labour shortage. Workers in the tourism, culture and hospitality sectors should not be allowed to migrate to other sectors. That's why I think the social safety net is something that is extremely important.

I was hearing earlier about the staggering increase in the cost of rent. In Quebec, nearly 1 million workers earn less than $15 an hour. Even if they are sometimes unionized, these workers live in a state of near poverty, unfortunately. Other speakers mentioned the importance of funding the construction of social housing and the creation of housing cooperatives to support the middle class and workers. These people often have very limited incomes. When real estate market costs in the Montreal area explode as they do in the Toronto or Vancouver area, it becomes untenable for middle class people.

I wanted to respond to Mr. Ste-Marie, but I also wanted to take the opportunity to address this issue. As Mr. Hemmings said in the words of the OECD, if Canada had not made the efforts it made to support the middle class, it would have been a disaster. As evidence, the working class in the U.S. has suffered from the lack of policies and a social safety net, which the Trump administration refused to put in place. In this regard, the Canadian government has not been shy about doing much of the work. As Hemmings said, Canada will pay down its debt through economic recovery. If austerity policies are reintroduced, we will once again destroy the entire social safety net, which would be a disaster in anticipation of the crises that are sure to arise in the future, unfortunately.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

This is your last question, Gabriel.

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

My last question has to do with tax fairness.

During the pandemic, since businesses were closed, people turned to Web giants like Amazon. Should the federal government expedite the requirement that these giants collect sales tax and pay the equivalent of a tax on their sales?

[Jacques Létourneau]

This was in my presentation, but unfortunately I skipped this topic. You did read the brief that we filed not too long ago. We do believe that the government needs to implement a tax on the GAFAs of this world, i.e. Google, Apple, Facebook, Amazon and others, while waiting for the OECD's proposed tax measures to be implemented.

I think the Liberal Party of Canada made a commitment to implement such a tax in the last election. What is called the temporary GAFA tax should definitely be implemented in the 2021 budget. I think it is urgent. It must be done to respect Quebec and Canadian companies, which pay taxes in Canada and Quebec.

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

Thank you very much.

[Jacques Létourneau]

My pleasure.

[The Chair, Liberal, Wayne Easter]

Thank you both for that passionate exchange.

We'll turn to Mr. Masse, who will be followed by Ms. Jansen.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair. It makes for good TV.

This question is for Ms. Baker.

I'm part of a border community. I represent Windsor, across from Detroit. Wayne and I both serve on the Canada-U.S. parliamentary association. We have had extensive ties with tourism with the United States. When Canada held the Vancouver Olympics, we moved the then Canadian Tourism Commission out to Vancouver. There was more of a concentrated attempt to get visitation from Europe and other parts of the world overseas. It kind of pushed down our American numbers a little bit. That went down over the different years.

Can you tell us about your members' experiences right now in border communities? Tourism in general across the country is down. Some things, when they had been opening up a little bit, were covered, but in border communities I think there's an extra layer of difficulty. We still cannot get at any of the customers we had before, in everything from entertainment to visitation in hotels.

[Alana Baker]

The best solution is just getting people moving and getting our customers back as quickly as possible. Obviously border reopening plays a critical role in that.

I would say that the rural and resort hotels should see a decent summer, although some of the provincial travel barriers do remain a risk. Where we do see a big risk right now is with the downtown and airport hotels. Those in the major urban centres are dependent on major events and attractions. That's what gets people moving into those cores. It's likely that they will perform very poorly not just this summer but for the remainder of 2021.

People do want to travel. At this point, we are hopeful that we will start to see some of those restrictions lifted and we can get people moving around again. I would have to guess that we'll see domestic travel pick up first, of course, followed by international travel and visitors once we do get some of the borders open. As I said earlier, we need a framework that gives some certainty about reopening safely and as soon as possible. That is a critical part of the equation in terms of getting people moving and back into our hotels.

[Brian Masse, NDP, Windsor West, ON]

Okay.

There's been a proposal from the Wilson Center, a think tank organization in Washington, with Canadian businesses, and there's also been the Canadian business council. I've been pushing for a border task force to be created. We used to have more of a working organization. There's the COVID task force right now, which is the cabinet and whoever they decide to consult.

We've seen in the past on border communities that some of the programs that have been instituted have become quite complicated. Some are outdated. Some need improvement. In the case of Nexus, we changed some things to make travel more accessible and get higher sign-ups and so forth. Do you think that's something an organization like yours would like to participate in? I know that others—chambers of commerce, manufacturers and so forth—are now going on board with this type of philosophy. They're looking to be part of more of an ongoing management style to help advocate and develop policies, even post-COVID, that would help the free flow of traffic, goods and services. We've even seen that for tourism.

There are just so many border complications right now. It should be more of an ongoing working process versus that of waiting month by month.

[Alana Baker]

Being part of the conversation is always welcome. Hotels are critical infrastructure as part of the overall travel and tourism economy. We all have a role to play. In fact, we play a critical role in the economy. As I said, the border conversation, as you mentioned, is a critical piece of that.

We always welcome the opportunity to continue the dialogue, have the conversation and see how we can all work together. We do share, at the end of the day, the ultimate goal of getting people moving around again.

[Brian Masse, NDP, Windsor West, ON]

Okay. Great.

Mr. Létourneau, you mentioned shipbuilding. When I hear that, I always hear the voice of my former colleague Peter Stoffer, who used to yell “What about shipbuilding?” in the House of Commons at every opportunity. We have the United States with their procurement policies on buy America, the Buy American Act, the Jones policy and a series of incentives to do domestic procurement. I don't see a contradiction for Canada to do some of that, especially for the military, the Coast Guard and so forth. I think we could be more assertive and aggressive, quite frankly, on procurement policy. Some of this we have to do anyway, outside of stimulus for COVID.

What's your thought about using and leveraging those elements? If we are able to do that, perhaps we could do co-agreements with the United States, if possible. It might be a way of joining together, as opposed to being isolated right now, outside of their entire policy, because that's kind of where we stand.

[Jacques Létourneau]

Personally, I believe that it is possible for Canada to get along with the United States and position itself through the three existing shipyards. Davie Shipbuilding has been pushing for its share of federal shipbuilding contracts for several years, but so have Seaspan in Vancouver and Irving in Halifax. In fact, in December 2019, the government prequalified Davie Shipbuilding to be an integral part of its shipbuilding strategy. It is still in the Canadian government's plans. Now, it's a bit like in other sectors: if there are no immediate projects for Davie, it will be extremely difficult to retain the workforce.

With respect to the commitment that Mr. Trudeau made regarding the Diefenbaker, we were surprised to hear recently that Seaspan in Vancouver may also qualify to work on the Diefenbaker.

I think Canada needs to have a self-sustaining shipyard policy that is independent and complementary to what is being done on the American side. I guess it's possible to do that. Above all, we must ensure that there is cohesion within Canada. Unfortunately, we have to admit that Quebec has been left out of the picture in recent years, while the Halifax and Vancouver yards have been awarded several construction contracts. In my opinion, we can maintain a balance in the country, while ensuring that Quebec has its place.

I remind you that the Davie shipyard is the largest shipyard in Canada. It is the shipyard that succeeded in carrying out, a few years ago, an important and ambitious project, that of the Obelix.

In my opinion, it is possible to hold discussions with our North American neighbours, while having an effective naval strategy that is specific to our production capacity.

[The Chair, Liberal, Wayne Easter]

Thanks to both of you.

We'll go to Ms. Jansen, who will be followed by Ms. Koutrakis. Go ahead, Tamara.

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

Thank you.

Mr. Hemmings, the OECD mentioned in their March 11 report that the COVID recovery process is “an opportunity” to build a more resilient economy that's “fairer and greener”.

Finance minister Chrystia Freeland used that exact same term recently, calling this pandemic a “political opportunity”. Quite frankly, Canadians find that beyond the pale. My constituents are losing their businesses, their livelihoods and their mental health. People I speak to on the phone are crying because they're losing everything, and it feels like the government plans to kick us when we're down. Does this really seem to you like an opportunity to drastically change our economy?

[Philip Hemmings]

Certainly what our report aims to emphasize is that, as I've said, the key thing right now is to keep these supplementary forms of support to households and businesses going while the economy is fragile. While there are people struggling, you need these extra support schemes, but it's true that the pandemic does also give us some opportunities.

For instance, if governments, in addition to supplementary support programs, are thinking, “Okay, let's try to reduce the amount of energy wastage with some programs to encourage people to insulate their homes better than they're insulated right now”, that's one of the directions that you can move in. That's not a direction that would necessarily put people out of work; in fact, it ought to be creating some work. The intention is particularly to—

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

I'm sorry. My time is short and I have two more questions.

[Philip Hemmings]

I'm sorry. All right.