Finance Committee on May 11th, 2021

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome to meeting number 41 of the House of Commons Standing Committee on Finance. Pursuant to Standing Order 108(2) and the committee's motion adopted on Tuesday, April 27, the committee is meeting to study the subject matter of Bill C-30, an act to implement certain provisions of the budget tabled in Parliament on April 19, 2021 and other measures.

We're fortunate today to have with us the Hon. Chrystia Freeland, Minister of Finance and Deputy Prime Minister, and quite a number of officials from the department. We'll introduce those officials in the second round.

Madam Minister, welcome. We'll start with an opening statement from you. If you could hold it to not much more than five minutes, that would be helpful. That way we can get to questions faster.

For MPs, the question lineup after the minister completes her remarks is Mr. Fast, Ms. Dzerowicz, Mr. Ste-Marie and Mr. Julian.

The floor is yours, Minister. Welcome, green grass and all.

[Chrystia Freeland, Liberal, Minister of Finance]

Thank you very much, Mr. Chair. I will leave it to you to introduce the officials later on, but let me say thank you very much to the officials for being with us.

Mr. Chair and members of the committee, thank you for inviting me to speak to you today about Bill C-30, Budget Implementation Act, 2021, No. 1.

After more than 14 months of uncertainty and challenges, Canadians are continuing to fight COVID-19, but we know there is light at the end of the tunnel. As we fight the third wave, more and more Canadians are getting vaccinated.

Bill C-30 is an essential piece of legislation that, once enacted, will allow us to implement our plan to finish the fight against COVID, create jobs and a swift recovery from the COVID recession and lay a foundation for robust, inclusive, green, long-term economic growth.

This budget is about helping middle-class Canadians, helping workers and helping more Canadians to join the middle class. It is about embracing this moment of global transformation to a greener, cleaner economy. It is a plan that will help Canadians and Canadian businesses heal the wounds of COVID and come roaring back.

First, we need to finish the fight against this virus. This bill includes a one-time payment of $4 billion to the provinces and territories to support their health care systems, support that is so essential as we fight the third wave. This is in addition to the $1 billion to support the provinces and territories as they ramp up their vaccine campaigns.

We are making progress in our vaccination efforts, and I know that team Canada can vaccinate even more Canadians even more quickly, and we will. I was vaccinated with the AstraZeneca vaccine at a Toronto pharmacy 15 days ago, and I encourage all Canadians to get vaccinated as soon as it is their turn.

The pandemic has caused a recession, so we need to start by rolling out a comprehensive plan for jobs and growth, to address the disproportionate impact the recession has had on women, young people, racialized Canadians, low-wage workers and small business.

A cornerstone of our plan is a historic investment of $30 billion over five years, reaching $9.2 billion annually, in permanent investments to provide high-quality, affordable and accessible early learning and child care across Canada. Our goal is that within five years, families everywhere in Canada should have access to high-quality child care for an average of $10 a day. Dear colleagues from all political parties, let's make a commitment together today to all Canadians. Let's get this done.

I want to take a moment to recognize Quebec's leadership, especially that of feminist Quebeckers, who have led the way for the rest of Canada.

While we know better days are ahead, many families are still struggling. Around a million Canadians either remain out of work or are working significantly fewer hours than they were pre-pandemic. We must support hard-hit Canadians and businesses across the country so they can recover as soon as possible.

Bill C-30 includes emergency supports for Canadian workers, businesses and families.

The legislation extends the Canada emergency wage subsidy, the Canada emergency rent subsidy, and lockdown support through to September 25, 2021 which will help protect millions of jobs.

With this legislation, we are providing a bridge for people who are unable to work because of COVID by extending income supports, maintaining flexible access to EI benefits, and extending the EI sickness benefit from 15 to 26 weeks.

Bill C-30 also introduces a $15 an hour federal minimum wage. It expands the Canada workers benefit, extending income top-ups to about a million more low wage workers, and lifting nearly 100,000 Canadians out of poverty. These are measurable concrete steps to help Canadians who need help.

We must also help small business, the backbone of our economy and every main street in the country. To do that, we need to improve access to capital and help businesses hire more workers, in particular, through the new Canada recovery hiring program.

Young Canadians have made tremendous sacrifices this past year to protect their elders, and now, they need our collective support.

Through Bill C-30, we will make college and university more accessible and affordable by extending the waiver of interest accrual on federal student loans until March 2023. This will mean savings for more than 1.5 million Canadians repaying student loans. We will not let young Canadians become a lost generation.

Mr. Chair, I have spoken today about just a few of the measures included in Bill C-30, measures which will make a tangible positive difference in the lives of millions of Canadians.

This is a plan for jobs, growth and the middle class. It is a plan built around helping Canadians recover, succeed and thrive.

I recognize the critical role parliamentary committees play in scrutinizing government legislation, and I'm grateful to all of you for your hard work.

Bill C-30 is a historic first step towards recovery and new economic growth for future generations of Canadians.

I would be pleased to answer any questions you have as you study this critically important piece of legislation.

Thank you.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Minister, and thank you to the officials for being here, as well.

The first round will be a six-minute round starting with Mr. Fast, and then a split between Ms. Dzerowicz and Mr. Fragiskatos.

Mr. Fast, please go ahead.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

Thank you, Minister, for appearing before committee again.

I again want to congratulate you for being the first female finance minister to deliver a federal budget and, hopefully, it's the first of many to be delivered by women in the future.

I do note, however, that this is also the largest spending budget ever and creates the largest debt and deficits in our country's history. My fear is that future generations will look back on this budget as the one that created a financial burden that undermined their prospects of living the Canadian dream. I certainly hope that is not the case and that, in fact, Canadians still have the prospect of a bright future ahead of them.

With that in mind, I want to refer you to not only the fall economic statement, but also the budget that this BIA implements.

I note that in the fall economic statement you projected GDP growth at 4.8%, but the budget says that it's going to be better than that; it's going to be 5.8%. You projected in the fall that revenues would be around $335 billion. Now, in the budget, you're predicting that it's going to be better than that, and we're going to have $20 billion more. With more cash coming in by way of revenues and more economic growth predicted in this budget, you're still projecting a deficit that is higher than what you projected in the fall economic statement.

The same is true in 2022-23, which is the next fiscal year. Again, the projected revenues are going to be up by about $20 billion, so you have more revenue coming in, more money in the bank account, and your growth is projected to be close to 1% higher than the fall economic statement had suggested, yet you're predicting a deficit that is $9 billion higher than the fall economic statement.

My concern is this. We have better growth; we have higher government revenues in this year and the next, yet, for some reason, you're not only spending all of the unexpected additional revenue, you're also increasing the amount you're going to borrow each year. We're going backwards, big time.

For every extra dollar that comes in in revenue, you seem to think that you can spend that dollar and then borrow even more than you had initially projected, so how is that a sustainable fiscal and debt management plan?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

First, Mr. Fast, thank you for your kind comments. You made a similar comment that I really appreciated when I delivered the budget. I will take this opportunity to recognize a woman who I think deserves the respect of all of us, and that is Kim Campbell, Canada's first woman prime minister. She was, of course, a Conservative, so I will take this opportunity in turn to congratulate you and your party for having broken that glass ceiling, and to congratulate Ms. Campbell.

You have addressed some questions broadly around fiscal sustainability in the budget and around debt and deficits, and around the FES projections and the budget projections. Let me make a few comments.

The first comment I would make is that when it comes to the growth projections, a long-standing practice, in fact one that dates back to 1994, is that the budget is based on the average of forecasts of private sector economists. I think this is a great example of institutional strength of Canadian institutions and I make that point to the committee to be clear about why the projections have changed. The projections of private sector economists have changed and that has been what we have used as the basis of our fiscal track. Now, I know that members of this committee are well aware of this, but I just want to be clear with all Canadians.

To the second point around the sustainability of our spending, I assure members of the committee that I am very confident that the spending in our budget is reasonable and sustainable. There are a couple of key markers that I would point people to. The first is that we show a declining debt-to-GDP ratio, falling to 49.2% in 2025-26, and likewise, a declining deficit, falling to 1.1% in that outer year. I would also point out that it is not merely my judgment that the debt and deficit track is reasonable and sustainable, it's also the judgment of some important outside validators. I would start by citing S&P. On April 26, they reaffirmed Canada's AAA credit rating, the highest there is, and said that the outlook was stable. That was after reviewing our budget.

I would also point to comments published today of former governor Stephen Poloz, who was, of course, appointed by Prime Minister Harper. He actually spoke about how in his view the assumptions in the budget were actually quite small-c conservative and that he did believe there was a sustainable path.

[The Chair, Liberal, Wayne Easter]

I'm going to have to cut you both off there. We're over six minutes and that's hard to believe, but it was three minutes apiece.

We're going, then, to Ms. Dzerowicz, who will split time with Mr. Fragiskatos.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

Thank you, Minister, for being here today. Thank you for your extraordinary leadership during this unprecedented time, and congratulations on being the first female finance minister to introduce a budget.

My first question is on the Canada emergency wage subsidy. As we all know, it has been a huge lifeline to businesses right across the country, including in my riding of Davenport.

How are we ensuring that Canadian companies that are receiving the emergency wage subsidy are using it only for employee salaries; and why did we not include a needs test in assessing which companies should be able to access the wage subsidy?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you, Ms. Dzerowicz. It's nice to see you.

Let me just start by pointing out, as you have, that the wage subsidy has been providing, and continues to provide, absolutely critical support to Canadian businesses and, crucially, to Canadian workers. More than 5.3 million jobs across the country have thus far been supported by the wage subsidy. In the province where you and I are both members of Parliament, Julie, more than 1.88 million jobs have been supported by the wage subsidy.

As I know members of the committee are aware, the amount of subsidy a company can claim for its employees is based on revenue loss. The more revenue you have lost, the more subsidy you are able to claim. We think that is fair. It is a way of targeting the support to where it is needed the most. Of course, I know that members of the committee are aware that companies can only claim the wage subsidy for employee remuneration.

Bill C-30, which we are discussing today, includes a further—and I think important—condition for publicly listed companies. If we pass this important legislation, the remuneration of top executives in 2021... If it exceeds their remuneration in 2019, their companies will need to pay back the difference to the government, up to the total amount of wage subsidy they received. That is a new condition we're bringing in with Bill C-30, and I hope members will support that.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

I have one more—

[The Chair, Liberal, Wayne Easter]

Please be very quick.

[Julie Dzerowicz, Liberal, Davenport, ON]

Minister, we will not be able to achieve gender equity if women continue to battle gender-based violence. Why was it important to include a substantial amount of money in budget 2021 for a national plan to end gender-based violence?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I do think this is a measure that all members of the committee will support.

This budget includes unprecedented investments for fighting gender-based violence, investments of more than $600 million. I think that fighting gender-based violence has been an issue in Canada for a long time, but it would also be fair to say that the pandemic has made the situation more acute for many vulnerable Canadians. Being forced to stay at home has meant that some Canadian women have found themselves closed into a dangerous environment, so I'm really pleased that we have this major investment.

I see the chair nudging me to stop talking, so I will.

[The Chair, Liberal, Wayne Easter]

Mr. Fragiskatos.

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

Thank you, Chair.

Thank you for being here, Minister.

One of the points in the budget that has been overlooked in the public commentary that has taken place is the move towards initiating a public consultation on the criminal rate of interest in the Criminal Code.

As you know, Minister, currently that threshold is set at 60%, a very high number that has hurt a lot of people. This is on installment loans and lines of credit.

I want to ask you about the consultation. What are your thoughts on it? I'd like to know what it would examine exactly, when it might begin, anything like that.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

This consultation in the budget is really important to me and I think to all Canadians. We've seen that the pandemic has had such an uneven impact on people. Some people are getting through okay or even doing well, but there are other people who are really struggling. We know that predatory lending and criminal rates of interest hit the most vulnerable Canadians. For many lower- and modest-income Canadians, predatory lending, including payday lending, can impose real hardship.

The consultation that we are launching is going to give us, as a government and as parliamentarians, a chance to talk to Canadians and really act on this issue, which can cause a lot of misery for a lot of people.

[The Chair, Liberal, Wayne Easter]

We will have to end it there.

Mr. Ste-Marie, you have six minutes.

Gabriel.

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

Thank you, Mr. Chair.

Good afternoon, Minister. Thank you for being here.

Thank you, as well, to your team of officials.

Minister, the bill contains a slew of very positive measures. I have a limited amount of time, so I will focus on those I have questions or comments about.

I'll start with division 8 of part 4, which enacts the Retail Payment Activities Act.

I realize that legislation in this area is needed given the current void, so I applaud the measure. I will continue to examine how the legislation will interact with the Quebec Civil Code, which governs person-to-person transactions. I want to better understand why the federal government is regulating these activities.

Right now, though, I am mainly interested in hearing about your plans for the tech giants, major online retailers such as Amazon and Walmart. Does division 8 of part 4 allow them, either directly or indirectly, to provide services currently offered by financial institutions?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Good afternoon, Mr. Ste-Marie. I always appreciate your questions and comments.

Initially, I thought you were going to ask about the taxes we will be collecting from tech giants thanks to this budget.

As far as financial services are concerned, as you know and as you pointed out, we talked about engaging in a discussion, a consultation. That's what we are proposing.

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

Once the consultation process for division 8—which enacts the Retail Payment Activities Act—comes to an end, you have no plans to give Amazon, Walmart and other tech giants the same ability that financial institutions have to provide payment tools.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

No.

We realize three things.

First, we understand that Canada's situation is unique. The reality is that the Quebec Civil Code exists, as you said, and any actions we take must be acceptable to all the provinces and territories. That makes Canada's situation unique.

Second, we understand that this is the 21st century. Technology and the global economy are changing rapidly, so we need to pay close attention to those changes. Canada and Quebec want to—and must—be part of the modern economy.

Third, we must always protect Canadian businesses and citizens. That means ensuring the playing field is always level for Canadians and foreign companies.

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

Thank you for clarifying your intentions as regards division 8. That makes me feel better.

The second issue I want to talk about relates to credit cards.

In the budget, you laid out your intentions to limit interchange fees, or to ensure small businesses are treated more fairly in relation to big merchants, which have the ability to negotiate lower credit card interchange fees. In the budget, you indicated that next steps would be outlined in the fall. Why did you not go ahead and implement the measure through Bill C-30?

I would remind you that a Liberal member, Linda Lapointe, brought forward a private member's bill to address this very issue in a previous parliament. Her bill was delayed twice, before she was appointed to a position within the government. She then had to abandon the bill.

As I see it, action is urgently needed, especially since the pandemic has hurt small businesses and deepened the inequity between small and large businesses. Why, then, did you not bring the measure into force now?

From what I gather, putting it off means it may not be implemented until after the election.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for your question.

My understanding is that, overall, you support the direction we've taken. That is a positive sign. Thank you for your support.

I agree with you that, from an economic standpoint, small and medium-sized businesses have been the hardest hit and greatly need our help. That's one reason, if not the main reason, why we made it clear in the budget that this was what we intended to do.

We understand that the COVID-19 recession hit small and medium-sized businesses incredibly hard, and we also understand that, because of the pandemic, they are now more dependent than ever on virtual transactions and credit cards. That is why we clearly signalled our intention to move forward on this. I hope we can count on your support.

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

Of course, we would have liked—

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Julian, followed by Mr. Falk.

You have six minutes, Peter.

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

Thanks very much, Mr. Chair.

Thanks to all our witnesses for coming here today. That includes the departmental witnesses. We hope your families continue to stay safe and healthy.

Congratulations, Madam Freeland, for shattering that glass ceiling as the first Canadian woman to present a national budget.

Now, the context of that national budget is that Canadians are suffering through an unparalleled crisis. At the same time, we've seen Canadian billionaires increase their wealth by $78 billion. Hundreds of thousands of Canadians have not been able to return to work. Yet Bill C-30 slashes, in just a few weeks' time, as the third wave crashes on our shores—the most devastating wave yet—the CRB from $500 a week to $300 a week. At the same time, it does nothing to address the fact that Canadian students are having to pay back student loans during a pandemic.

Will the government accept amendments to ensure that the CRB is not slashed from $500 to $300 in the midst of a pandemic and that students get a debt moratorium so that they are not having to pay back student loans in the middle of this crisis?