Finance Committee on May 11th, 2021

[Nicholas Leswick]

Thank you again for the question.

Yes, I would assume so. What we printed in the budget was a normalization path from both an economic and fiscal policy perspective. As the economy strengthens, you see employment and output get back to trend. Likewise along that path, there are these support programs and the stimulus-type spending, which start to wind down over the three-year fiscal horizon. In terms of the word “withdraw”, I think it's relative to what was printed in the budget and that wind-down of government spending over the near term.

[The Chair, Liberal, Wayne Easter]

Thanks, both of you.

We'll go to Mr. Fraser, who will be followed by Mr. Ste-Marie, Mr. Julian and then Mr. Kelly, who will be first up in the next round.

Go ahead, Sean.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much, Mr. Chair, and thank you to officials.

I have the neighbour mowing the lawn just outside my window, so I apologize for any noise pollution.

My first question relates to the proposed investments in Canada's national early learning and child care framework that were included in the budget. Obviously, to the first point you made, Mr. Leswick, around government spending finding its way into the economy, I see this as a major opportunity. I see the investments that will create affordable access to child care and in particular will allow more parents, predominantly women, to take part in the economy compared to the rate at which they do today.

One of the knocks that I hear about the program from folks who are opposed to it is the sticker shock they have when they see that this is a $30-billion investment. I'm curious to know if you've done an analysis on the anticipated economic return associated with this investment. Forgetting for the moment that I think it's the right thing to do from a gender parity point of view, just from a crass economic point of view, what do the numbers show us in terms of the anticipated economic return for dollars spent on this measure?

[Nicholas Leswick]

We tried to print a short brief of this type of analysis in the budget. In today's terms, modelling the impacts of what we've seen in effective early learning and child care programs in Quebec, which feed-through to increased labour force participation, if we just apply that on a pan-Canadian basis, we would equate that to roughly 240,000 jobs. Those are new entrants into the labour market equivalent to about 240,000 new workers, which would then feed through into an increase in output of roughly a little over 1% in the level of real GDP.

Hopefully that gives you some benchmark indicator.

[Sean Fraser, Liberal, Central Nova, NS]

Yes, I think that's really helpful. To find opportunities to boost GDP by 1% year over year is a great thing. I'm curious if you have a similar assessment on the actual government revenue that would be generated from that increase in GDP or employment. Do you have any estimates as to what the increased government revenue is?

I'm trying to figure out whether this measure will pay for itself or come close to paying for itself.

[Nicholas Leswick]

There's a broad literature on this exact question. Of course, we do our own analysis within the department. Personally, I'm not in the camp of a “this thing pays for itself” type of conclusion. Depending on how you calibrate your models and expect feed-through into the economy, there is some literature out there that suggests that, dollar for dollar, it would pay for itself.

I think the bottom line is that, in terms of things you could be doing to generate either labour force participation or increased productivity, this is one of those things that's at the very top of the list in terms of return on investment from a government perspective. With either conclusion, there's a real payback here.

[Sean Fraser, Liberal, Central Nova, NS]

Excellent.

Mr. Chair, do I have time for an additional question?

[The Chair, Liberal, Wayne Easter]

Yes.

[Sean Fraser, Liberal, Central Nova, NS]

I want to talk about the Canada workers benefit. Aside from a passing reference from the Bank of Montreal, I've seen fairly few third parties pick up on this particular investment. It's designed, obviously, to assist low-income workers through direct support. The measures we've done have essentially extended the net, so to speak, to make sure it catches more people who may be earning more than what the current program provides.

I'm curious if you can give a similar assessment for the Canada workers benefit in terms of the estimated impact, both in terms of the number of people who will be impacted by this change and the extent to which they'll be impacted. The minister testified that it would have a positive impact on labour force participation.

Do you have any assessment as to the impact the proposed changes to the Canada workers benefit is going to have on the working poor in Canada?

[The Chair, Liberal, Wayne Easter]

Who's taking that one?

[Andrew Marsland, Senior Assistant Deputy Minister, Tax Policy Branch, Department of Finance]

Maybe I'll take that one. I have a couple of comments in response.

The proposed changes to the Canada workers benefit do extend out the range to essentially provide benefits to full-time, minimum wage workers. It also includes a mechanism to ensure the potential disincentive effects, particularly for secondary workers—who are women, more often than not—are mitigated. It excludes the first $14,000 of that secondary earner's income, which is an important aspect in terms of looking at this.

In terms of effect, we estimate that about a million additional workers would benefit from this.

In terms of the broader economic effect, I don't have an estimate of that. There is a considerable amount of literature with reference to the earned income tax credit in the U.S., which demonstrates that this has a positive effect on labour market participation, which of course is a key driver of economic growth.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll go to Mr. Ste-Marie, followed by Mr. Julian.

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

Thank you, Mr. Chair.

Good afternoon everyone.

I want to echo what the chair said and thank you for all your hard work since the pandemic began. Please pass on our thanks to everyone on your team. I commend you.

I would like clarification on the industry support to address climate change. I'm looking for details on the various programs that were introduced or announced to help economic sectors reduce their carbon emissions.

Could someone please list the programs that were introduced and tell me how much funding went to each? I'd also like to know which votes were approved and have already been spent, as well as which ones have been announced but have yet to be approved.

[The Chair, Liberal, Wayne Easter]

Ms. Dancey.

[Evelyn Dancey, Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance]

Good afternoon. Thank you for your question.

A number of the details you asked for are difficult to provide today, especially as regards expenditures to date. I recommend following up with the committee in writing. That way, we can provide more detailed information.

The budget contains numerous measures, as does the strengthened climate plan, which was launched in December. There's quite a bit of information to cover. For instance, the budget includes a few major initiatives related to the strategic innovation fund. In addition, at least three or four climate change measures are intended to help farmers cover the additional costs.

Given the amount of information, I would prefer to provide the committee with a written answer.

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

Thank you, Ms. Dancey. Yes, we would very much appreciate it if you could provide us with an overview and, if possible, indicate how much has been spent to date, how much has been approved as well as what hasn't been approved. You mentioned agriculture, so I'm wondering whether you could break down the information by province and sector.

I'm not sure whether you can answer this next question now, but I'd like to know whether any programs provide support for small modular nuclear reactors in relation to reducing greenhouse gas emissions.

[Evelyn Dancey]

Clearly, I'm not familiar with the ins and outs of all the federal programs, but I do know that support is available for research and technology through the granting councils. The industrial research assistance program, or IRAP for short, is available. Some new programs were just introduced, but the details have yet to be released.

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

Thank you.

If you happen to come across more specific information, it would be appreciated if you could send it to the committee. Thank you again.

I want to follow up on something I was asking the minister about.

I'm referring to division 8 of part 4 of Bill C-30, which enacts the Retail Payment Activities Act. Can you confirm for me that nothing in the act will make it possible for Amazon, Walmart or other tech giants to provide services currently offered by financial institutions?

[The Chair, Liberal, Wayne Easter]

Ms. Anderson, go ahead.

[Leah Anderson, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance]

I hope my mike is working.

You're right, that part governs—

[The Chair, Liberal, Wayne Easter]

Ms. Anderson, the interpretation service can't make you out. We are getting an echo with the mike. Would it be possible to get an answer to that question in writing, perhaps?

[Leah Anderson]

All right.

[The Chair, Liberal, Wayne Easter]

Okay. I'm sorry about that, Ms. Anderson. It's just not coming through.

We will have to end that round there and go to Mr. Julian.

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

Thanks very much, Mr. Chair.

Thank you to our witnesses for being here.

I will be a bit repetitive. I didn't get answers in the first round, so bear with me.

My first question is about the slashing of the CRB. We have the third COVID wave. The variants are tragically taking hold. I'm wondering what the analysis of the finance ministry has been of the impact of reducing the CRB from $500 a week to $300 a week in July. How many people, at this point, do you assume will be on CRB if the third wave increases? What is the range—the highest level, with a tragic escalation of the third wave, and the lowest level?

That's my first question.

[The Chair, Liberal, Wayne Easter]

Is it Ms. Anderson on this one, as well? Who's up on this one, the Canada recovery benefit?