Finance Committee on April 20th, 2021

[Jean-Guy Côté]

The research chair in taxation and public finance at the Université de Sherbrooke conducted research on the impact of applying the GST to various products purchased online from abroad. It was estimated that, for Canada as a whole, the lost revenue for the government in terms of these products amounted to between $864 million and $1.93 billion per year. Given a possible return to balanced budgets, this constitutes an attractive revenue stream for the government. It would also promote fairness between retailers based in Canada and Quebec and international platforms.

Apart from that, there's also a measure concerning interchange fees. Remember that interchange fees in Canada are among the highest in the world. Europe caps them at 0.5%, while in Canada they average 1.5%. Most recently, the rate was 1.4%. This measure would go a long way to putting some money back into the system. To give you some perspective, I'll use the example of the European Union. An estimated 800 million euros per year has been taken out of the pockets of European taxpayers simply by capping interchange fees.

There are other measures. We'll actively participate in the consultation announced in the budget, and we hope to see more concrete measures this fall.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you for the clarification, Mr. Côté.

As you may know, yesterday's budget extended the Canada emergency wage subsidy and the Canada emergency rent subsidy. However, we can see that the percentage of assistance will decrease starting in July.

In your opinion, should these programs have been extended at the current rates for the hardest-hit sectors, including some businesses?

[Jean-Guy Côté]

The various subsidies are still in place because they're supporting the different businesses during the pandemic. If the number of cases remains very high over the summer and businesses are unable to reopen as planned, the gradual disappearance of these subsidies may be more difficult for the businesses.

The wage subsidy is crucial for retailers, since it's vital to maintaining the employment relationship. In Quebec and the rest of Canada, retailers are finding it very hard to recruit employees. In this situation, they can't afford to send an employee back home for the third time because of the lockdown. Any reasonably resourceful employee without a strong employment relationship will update their resumé and find a job elsewhere.

When the economy picks up, the recruitment challenges will resurface. There isn't a large supply of potential employees in the sector, so this may cause issues in terms of the services provided.

[The Chair, Liberal, Wayne Easter]

Thank you both.

We will turn to Mr. Julian. We will have a little time [Technical difficulty—Editor] five. It will be Mr. Kelly, Ms. Koutrakis, Ms. May and Mr. Sorbara. We will have a few minutes left if others want on.

We're turning to Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thanks very much, Mr. Chair.

I'd like to turn to Mr. Yussuff for a question.

I'd like to thank you for being such a strong advocate for public universal pharmacare. As well as the Canadian Labour Congress, we've had labour activists across the country who have really been fighting for public universal pharmacare. Particularly with this pandemic and the number of people who've lost their jobs, we're seeing an increasing number of people who have no medication plan at all. That's why the Canada pharmacare act that was brought forward in February—and endorsed by the CLC, as you know—was so important. Government voted that down. That would have structured pharmacare on the same basis as our universal health care.

The Hoskins report called for funding this year to negotiate with the provinces to set things in motion. There was no new funding available for pharmacare at all in this budget. Many people are saying that this is abandoning pharmacare and that pharmacare and child care could have been discussed and negotiated with the provinces together.

Could you outline the importance of having public universal pharmacare for workers and for the millions of Canadians who have no medication plan and who struggle to pay for their medication, particularly in a pandemic?

[Hassan Yussuff]

Thanks, Peter, for your question.

Of course, we have had a campaign out for over three years in regard to establishing a national pharmacare. This came about, again, through our own convention and dialogue with our members. I spent a couple of months criss-crossing the country. I did a 27-city tour, talking to Canadians in general about the challenge we face. The stories I heard certainly broke my heart in regard to how people are struggling to access medication. It certainly reinforced for us that this is a fundamental commitment. We have to find a way, as a country, to bring in a national pharmacare plan that will take....

My entire life I've had no real need for medication. I've been fortunate. I haven't been sick. I don't need to take medication, but I've had coverage from my workplace plan. There are millions of Canadians who don't have that luxury of having a workplace plan where they can actually go and get their medication. I understand very much what people are struggling with.

I think yesterday was a missed opportunity in the budget, and I really think that people need to know very clearly that we are not going to stop our campaign to achieve a national pharmacare plan. It's one thing we have done and will continue to do. We believe this is achievable, and more importantly, the cost of medication for the provinces and for the federal government is not going to go down in terms of recollective purchases. The sooner we can find a national mechanism to purchase medication but also to develop a national formulary, I think, the sooner we'll get to a place where we can show how we can do this.

The provinces are an equal part of it. It is important that the federal government partner with the provinces to make this happen. Of course, Hoskins, in his report, laid out a very clear plan of how we can get there. Essential medicine is the first part of his recommendation. We're going to continue our efforts.

I would make a last point on this. A lot of our members, by the way, as a result of the pandemic, who have lost their jobs and been laid off, have also lost their workplace coverage. They have no access to their workplace coverage at the end of the day. It's critical. In this context, we saw this, of course, as a major disappointment yesterday, and we'll continue our efforts.

I would end with this. When we started our work to expand the Canada pension plan, it took us nine years to get the federal government and the provinces to come together to achieve that objective. Nobody ever thought we would do that, and despite a commitment to do so by the previous federal government—and then it failed—we finally succeeded in 2016.

I can say this without any hesitation: We will not stop our campaign to achieve a national pharmacare plan because we think it's fundamental to the equality of all Canadians. If you live in P.E.I., you should not have different access to medication than if you live in Ontario or in British Columbia. We should all be treated the same, and the only way we're going to do this is the way we have done health care in this country.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you considerably.

We go over to Mr. Kelly, followed by Ms. Koutrakis, in five-minute rounds.

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

Thanks, Mr. Chair.

Just to begin, as the shadow minister for small business, I want to focus my questions on some of our witnesses who represent small business members. I'll maybe start with Monsieur Côté.

Is it fair to say that while many of your members have been assisted by the government programs that have been designed to keep people employed and to keep businesses from immediate collapse in assisting with expenses like rent, for most of them, there's just no substitute for having their customers back? Would you comment on the necessity of a plan for a safe and permanent reopening of the economy?

[Jean-Guy Côté]

Thank you, Mr. Kelly.

I have to say that my members mostly want to reopen as soon as possible—that's their main goal—but obviously they don't want to mix that with having some customers getting sick inside their stores. They will follow the rules of the different public health unit in each province to reopen, especially in Quebec. Some regions are under stress right now with a lot of COVID cases.

Frankly, we hope the summer will be a bringer of good news. The vaccination process is going well, but the reopening will not be as fast as people think. There will be some adjustments along the way to get the people back, and the places back.

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

Thank you.

I'll now ask Ms. Hodson to weigh in on this, and maybe in particular, on the issue of debt and indebtedness. You mentioned your own business and you've talked about the number of businesses in your industry that have closed. It seems to me there are three kinds of debt going on here. There are government aid measures, which are debt and cause businesses to become indebted. There is existing credit and commercial debt that businesses take on. There is also a lot of less-understood and less-tracked debt. You mentioned parts of it—rental arrears, unpaid invoices, bills to other partners or affiliated businesses.

Could you comment on the role debt is playing in your business and the threats to recovery that debt presents in the business community?

[Sara Hodson]

Absolutely. Thank you for the opportunity.

In addition to everything you mentioned, in the fitness business, we have to lease fitness equipment, and that is still in our facilities. We are still obligated to cover those costs. Again, we are an industry that did have to invest, and many times, that meant going into debt to continue to serve our customers online. That meant building online platforms and maybe software licensing, which is expensive and is per user.

Again, the biggest issue that we experience in the fitness industry is the return of the consumer. When are we going to see the psychological and physical return of the consumer? That's where our biggest loss is. Again, across Canada, facilities are losing $15,000 to $30,000 a month. A large player in Alberta with a chain of gyms is using the rent subsidy. However, with the caps and the way the program is built, they're still on the hook for over $800,000 of additional rent every month and have gone into default on those rental agreements.

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

Okay. You mentioned that the rental assistance program won't prevent defaults on rent.

[Sara Hodson]

Exactly.

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

Wayne, with just half a minute left, I'll maybe just—

[The Chair, Liberal, Wayne Easter]

Take whatever time you need.

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

Wayne, as chair, I just want to let you know that I'm hoping to have about five minutes to move my motion. I hope we won't need a lengthy debate on it, but I'll do that at the end.

[The Chair, Liberal, Wayne Easter]

We will have five minutes after each of the rounds.

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

Okay, at the end—yes.

[The Chair, Liberal, Wayne Easter]

We'll hear from Ms. Koutrakis, followed by Ms. May and then Mr. Sorbara.

Ms. Koutrakis.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair, and welcome to all our witnesses this afternoon.

My first question is to Mr. Yussuff. In yesterday's budget, Minister Freeland announced commitments to support Canadian workers, including a federal minimum wage of $15. It also included investments in skilled training, and as we heard in earlier testimony, a plan to implement early learning and child care as well as the extension of the emergency benefits.

Can you talk about how crucial these are to both Canadian workers and the economic recovery, and what you've heard through your membership?

[Hassan Yussuff]

As you know, we're still in the pandemic. There are thousands of Canadians who have yet to go back to work and who may not have a job to go back to when this pandemic is over. All of these measures announced yesterday are going to be critical.

The $15 minimum wage is really important in the federal jurisdiction. It provides leadership at the national level. Equally, there are a lot of workers in the federal jurisdiction who will benefit from this. A good number of them work at airports across the country that have been struggling. As you know, we didn't have a federal minimum wage in the code, and this is, I think, foundational for building forward as it's indexed to inflation. We can debate that, but I think this is really important. We certainly have been campaigning in the CLC for quite some time to establish a national minimum wage.

On the extension of the other program, the CERB, and the extension of benefits going forward, it's critical that workers are able to access benefits on a continuous basis. Again, I know there's a recognition that this pandemic may not be over in September, so we may have to look at those benefits again. There are a lot of Canadians who would have been in abject poverty had we not had those benefits to begin with to support these families and individuals. It's critical that we recognize those realities as we go forward.

The training program is going to give a lot of workers who have been laid off and likely know they may not be going back to their jobs.... It would be good if they could start accessing training to gain additional skills, so they can hopefully improve their job market capacity. An opportunity may come in some new form if they have new skills.

There's also some training recognition for young people in the budget, which is very critical. As you know from the 2008 recession, it took young people a good part of eight to nine years to get out of the double digits for unemployment. The measures announced yesterday are really important. We're going to need to connect young people to be able to access those training and apprenticeship programs, so that we can help give them a bright future going forward.

We're obviously supportive of most of the measures announced yesterday. We recognize that these will be critical to give workers some certainty that they're not going to lose their benefits overnight. A critical part is for us to innoculate Canadians and, more importantly, get the spread of the virus under control, so that we can reopen the economy. There's nothing like having a real job to go to. I think it will give people fulfillment.

Also, some of the investments in infrastructure are critical for the kind of Canada we need to meet our climate change challenge. I very much like the retrofitting announcement for businesses and for homes. It's really going to create a lot of jobs and it'll help families do their part to deal with climate change challenges while equally reducing their heating bills going forward.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you for that.

My next question is for Mr. Côté.

The 2021 budget proposes the new Canada recovery hiring program for employers that continue to see a decline in revenue compared to pre-pandemic levels.

How will this program help retailers hire new employees?

[Jean-Guy Côté]

It's mostly about securing some income so that conditions can still be provided to employees. Retail employment can be very volatile, especially in stores. A number of industries will need to draw from the same pool of employees during the recovery. The bottom line is that maintaining the subsidy ensures that highly skilled employees can be promised some income.

This measure may help in the coming months. However, how quickly will the funds from this program be withdrawn from retailers' revenue? Will this phase-out of subsidies align with the decrease in the number of cases and the reopening of stores? This remains to be seen.

[Annie Koutrakis, Liberal, Vimy, QC]

The Bank of Canada reported a dramatic increase in consumption during the pandemic.

Are you expecting significant increases in consumer activity and retail spending after the pandemic restrictions are lifted? How will this benefit your members?

[Jean-Guy Côté]

Since savings rates are extremely high, we expect to see a fair amount of consumption as businesses reopen. Major forecasters are also expecting strong growth after the removal of restrictions.

Some retail sectors are doing very well, such as hardware and renovation. The past few months have been very good for these businesses. However, other sectors, such as fashion and clothing retailers, are struggling a bit more. We expect these sectors to benefit from increased consumption as people return to work.