Finance Committee on May 11th, 2021

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

Mr. Julian, thank you very much for the question and for your continued advocacy for low-wage workers and students.

Let me start with students. I do believe that this budget provides unprecedented support for students and young Canadians, with more than $5 billion in support for young Canadians. It includes support in three things, actually, in the Canada student grant—in extending to 2023, as I said in my remarks, the interest moratorium and also in lowering the amount and raising the income threshold at which Canadian students need to begin repaying their loan after they graduate. That is real support for our young people, and they deserve it.

I'm happy to talk about the CRB later on, if you would like. I see that you're wanting to speak, Mr. Julian.

Mr. Chair, maybe I've run out of my time for an answer.

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

Thank you very much, Madam Freeland. Yes, I want to get back to other questions. I'm taking your answers as “no”, for the moment, on both.

On the wage subsidy, it is very controversial. Billions of dollars have been misused for dividends, stock buybacks and massive executive bonuses. The government has acknowledged that by kind of putting in place something for June 5 that doesn't include dividends and doesn't include stock buybacks, and yet the government has been saying all along that money should not be used for dividends, stock buybacks and executive bonuses, that the money should go to the workers.

My question is very simple and twofold. First off, will the government insist that a company that has laid off its workers and paid dividends and executive bonuses pay the money back?

Second, we wrote to you on January 5 asking for the full list of amounts that companies have received under the wage subsidy. Will you release those amounts so that Canadians can actually judge for themselves how the wage subsidy has been distributed?

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

Thank you, Mr. Julian, and Mr. Chair.

Mr. Julian, let me start by emphasizing what from my perspective is the most important reality about the wage subsidy, which is that this program has allowed literally millions of Canadians to continue to be employed, 5.3 millions across the country.

There are 621,000 jobs, Mr. Julian, in your province of British Columbia that have been supported by the wage subsidy. That's important for two reasons. These are people who continue to have an income, and they are people who continue to have a job. Maintaining that connection to your employer is absolutely essential. It is something that only the employer can help do. It's not something the government can do. That's why for us providing support that would keep people having an income and keep them connected to their jobs was absolutely essential, and the disclosure requirements for the wage subsidy were detailed in the initial wage subsidy legislation, which all parties supported.

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

Mr. Chair, I have two other questions.

[The Chair, Liberal, Wayne Easter]

You have one minute left.

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

I do thank you very much, Mr. Chair.

First off, Netflix is excluded from paying the much-vaunted new tax. Will the government disclose the secret agreement that took place in negotiations with Netflix behind the scene?

Secondly, concerning the Trans Mountain pipeline, how much does the government expect to pour into that pipeline? Given that the PBO has indicated that it will cost $14 billion for construction and another $4.5 billion for acquisition, at what point will this government step in to say enough is enough: we're not going to keep pouring money into this pipeline?

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

Mr. Julian, you and I sometimes disagree on policy outcomes, but rarely do we disagree on facts. Here, however, when it comes to Internet taxes, I must say that I disagree with your framing of what our government is doing. Let me just take a moment to outline what we're doing. First of all, there is no exclusion for Netflix or any Internet company.

Second of all, our government in this budget and in the fall economic statement is moving more clearly and more forcefully to introduce a level playing field for international and Canadian companies when it comes to the Internet space, and to impose taxes on digital service companies. We're doing that more forcefully than any Canadian government has ever done. We are doing that in three parts.

I now see the chair looking like he wants me to stop talking, so I will have to talk about those three different levels of tax that we are introducing in another answer, but I want to be clear that our government believes it is important to have a level playing field for Canadian companies in the Internet space, and it's important to be taxing the companies that are active in this space.

[The Chair, Liberal, Wayne Easter]

We will have to end it there. I want to get as many people through on questions as we can. We're back to Mr. Fast who will be followed by Ms. Koutrakis.

Ed, you have five minutes.

[Ed Fast, Conservative, Abbotsford, BC]

Minister, I do not want to rain on your parade, but many of us had hoped this would be a historic growth budget.

I sent a letter to you, suggesting that we needed comprehensive regulatory and tax reform. We asked you to address the flight of foreign direct investment from Canada. We needed a new comprehensive innovation strategy, not just the same old, same old.

As you know, many economists have lamented the fact that this budget is more about short-term benefit than positioning our economy for long-term success.

I am glad you referred to outside validators, because I have a few of those.

For example, Mark Carney, someone you know well, a former Bank of Canada governor, said, “What we’re seeing in some other jurisdictions is that the focus is more squarely on the growth.” David Dodge, also a former Bank of Canada governor, highlighted “a lack of growth-focused initiatives in the budget.” Robert Asselin, a former top economic adviser to your government, described the new spending as “unfocused and unimaginative.”

Finally, today, a former Clerk of the Privy Council, the highly respected Kevin Lynch, made so many different points. I will just summarize a few of them. He said that the budget “misses an urgent opportunity to rebuild our longer-term growth post-pandemic.” He added that “It does not set a clear fiscal anchor.” Furthermore, “Despite the extraordinary emphasis on stimulus, there is little focus and few measures to rebuild Canada’s longer-term growth.” He went on to say, “Our potential growth will drop...due to weak productivity, tanking competitiveness, and labour force challenges.” He ended by saying, “This budget’s intergenerational transfer of debt and risk is unprecedented.”

Minister, your own fall economic statement and budget betray the reality that as you raise more money through tax revenues and otherwise, you're simply going to spend more and borrow more, but there is nothing to position our economy for long-term growth.

This is a huge let down. Why?

[The Chair, Liberal, Wayne Easter]

Madam Minister, you will have equal time to respond, and then we're out of time.

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

Thank you, Mr. Chair.

Mr. Fast, as you know, I have a great deal of respect for you, as a person, and as a former minister, but I have to very respectfully say that I disagree very strongly with all of your contentions just now.

Let me take them in turn. First of all, when it comes to outside validation of the budget and of the fact that our budget is on a sustainable and responsible fiscal track, from my perspective, there is no better judge than the credit rating agencies, which are paid to assess the credit worthiness of borrowers.

For me, it is therefore really important to underscore for Canadians that S&P, a week after the budget, came out with a very strong endorsement, reaffirming Canada's AAA credit rating, and reaffirming that the outlook for Canada was stable. It really doesn't get better than that.

I would also like to refer members of this committee, and you, Mr. Fast, to the comments of the former governor of the Bank of Canada, Stephen Poloz, who was appointed by former Prime Minister Harper. He gave an interview, published today, in which he talked about the budget as being sustainable. He spoke about the conservatism in the numbers that he saw in the budget, and he spoke about the fact that this sustainable plan was put together without a meaningful increase in taxes of any kind. I couldn't agree more strongly.

When it comes to growth and innovation, let me point to three elements in the budget that, to my mind, are absolutely critical.

One is early learning and child care. We have heard from the IMF, Bank of Montreal, Scotiabank, TD, and from economists across Canada and around the world that investing in early learning and child care is a powerful long-term driver of jobs and growth. That is what this budget does. I think that is well understood across the country.

A second really important investment in long-term growth in this budget is the Canada workers benefit. In fact, BMO picked up on how that investment, which supports the lowest paid Canadians, is going to increase labour force participation.

Finally, I want to mention a third really important element, the unprecedented investments this budget makes in Canadian small businesses, allowing them to invest in themselves and giving them support to become more innovative.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Chair, do I have time for one more question?

[The Chair, Liberal, Wayne Easter]

No, you don't. We're well over the time. I'm sorry, Ed.

Ms. Koutrakis and Mr. McLeod will split the next five minutes.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Thank you to the minister and her team for being with us today.

Minister, as you have repeatedly mentioned over the past few weeks, this budget clearly focuses on jobs, growth and support for small business.

Could you name some of the specific programs you think benefit small business owners the most?

If I were a business owner, whether in my riding of Vimy or elsewhere in Canada, what key components of the budget would I want to pay attention to?

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

Thank you for your question, Ms. Koutrakis.

One of the key components of the budget is support for small and medium-sized businesses. Programs such as the Canada emergency wage subsidy and the Canada emergency rent subsidy will help them finish the fight against COVID-19.

The budget contains a number of other measures to help Canada's small and medium-sized businesses—the backbone of our economy—become more productive and competitive.

Quickly, I can point to three programs.

A new program will be available to small and medium-sized businesses between June and November to help them hire new workers.

The budget also includes measures to make it easier for small and medium-sized businesses to access credit.

Lastly, a newly introduced tax incentive will encourage small and medium-sized businesses to invest.

[Annie Koutrakis, Liberal, Vimy, QC]

Mr. Chair, do I still have time? I think I'm splitting my time.

[The Chair, Liberal, Wayne Easter]

You are out of time. We'll go Mr. McLeod. I'm sorry, Annie.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

Thank you to the minister for joining us.

I want to ask the minister the following question. When it comes to fiscal flexibility, the Government of Canada has significantly more capacity than its provincial-territorial and municipal counterparts. This is certainly the case in the area I come from, the Northwest Territories. How will the measures in Bill C-30 help ensure that these other orders of government are able to provide the services and infrastructure that their residents rely on?

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

I want to start by thanking you, Mr. McLeod, and the people of the Northwest Territories for the exceptional job you've been doing in fighting COVID. It has involved some significant sacrifices, but you have seen the real results of that.

We are very aware that the territories in particular face particular challenges, so let me outline a few measures in the budget to support the Northwest Territories.

The Northwest Territories will receive $1.4 billion this fiscal year through the territorial formula financing. That is an increase of $103 million from the previous year. We also announced last year an increase to the Northwest Territories' borrowing limit to $1.8 billion.

In addition, we have invested $25 million, as you well know because you've worked so hard on this issue, to address housing priorities in the Northwest Territories.

I could say more but I see our chair leaning towards his screen.

[The Chair, Liberal, Wayne Easter]

Okay, we are going to end it there.

Here's where we sit. We'll have a couple of minutes with Mr. Ste-Marie, a couple of minutes with Mr. Julian, five minutes with a split between Ms. Jansen and Mr. Falk, and then Mr. Fraser will wrap it up with five minutes. We'll be about 10 minutes over your time, Madam Minister.

Go ahead, Mr. Ste-Marie.

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

Thank you, Mr. Chair.

Minister, as you know, the greater Montreal area and other parts of Quebec are home to thousands of tech start-ups. At the beginning of the pandemic, they told us that the wage subsidy program was inadequate in terms of coverage. A start-up is, by definition, a business where someone puts up their own money while working towards a technological development, which, once ready, they can sell and reap the benefits of. The government turned to the innovation assistance program, administered by the National Research Council of Canada.

Now, some start-ups are asking why the program was not extended until September 25, like other income support programs. As we know, the innovation assistance program provides more than $250 million in funding, largely to start-ups. Some have even warned that, if the program ends, they could go bankrupt by the end of the pandemic.

Why end the innovation assistance program when we are this close to the goal line?

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

Thank you for your question.

I must say, I certainly recognize how important Montreal's innovation ecosystem is. Toronto, where I'm from, has a similar ecosystem. Mr. Julian is here, and Vancouver, in his riding, has an ecosystem as well. The same is true of many other Canadian cities and municipalities.

Start-ups are a very important part of our growth plan. Canadian innovators will find quite a few measures in the budget that are meant to help them, especially small and medium-sized businesses wanting to make growth-oriented investments.

The budget truly focuses on growth and the future, with numerous programs that will be particularly helpful to these types of businesses. If you like, I can put together a list and send it to you.

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

I would appreciate that because—

[The Chair, Liberal, Wayne Easter]

Thank you. Sorry, Gabriel. We're out of time.

Mr. Julian, you have two minutes.

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

Thanks very much, Mr. Chair.

We're supposed to all be in this together, yet Canada's billionaires have increased their wealth by $78 billion and Canada's banks have received an unparalleled package of liquidity support of $750 billion from various federal institutions, with over $40 billion in profits thus far in the pandemic. This is unprecedented that we've seen these massive levels of wealth, and yet most Canadians are struggling. As we talked about earlier, CRB is being slashed. Students are being forced to pay for their student loans. There's nothing for people with disabilities, despite the fact that half of the people who line up at food banks are people with disabilities.

Given all of that, it is perplexing beyond belief that there is no wealth tax in this budget. I know that there's a luxury tax. The spin is that this brings in a little bit of money. The PBO indicates that's about 1¢ on the dollar of what a wealth tax would bring in. There are no measures around cracking down on overseas tax havens that CRA has already indicated that they don't have the tools to take on, which is why there have been no convictions in the various Panama papers, Bahamas papers, that have come out that show tax evaders.

The question is very simple: Why no legislation to combat tax havens and why no wealth tax when 80% of Canadians support that?