Finance Committee on May 13th, 2021

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

That was one question I had too.

[The Chair, Liberal, Wayne Easter]

Just in case you don't know, we're on the budget implementation act.

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

That was my same question, whether you could compare it to 2019. Now I have another question.

You're saying that you could extend the wage subsidy, but would that be to everybody or could it be targeted to just those industries that are heavily affected, such as the tourism industry, which clearly is in a completely different boat and isn't able to utilize this one?

[Maude Lavoie]

I believe the regulations could only be extended to all employers who are currently eligible. I don't think a target to an industry could be done unless there was a legislative change.

Again, Trevor, please correct me if I'm wrong.

[Trevor McGowan]

No, you're absolutely correct. There are a certain number of things that can be changed by regulation. For the wage subsidy, it can be extended by two periods and the rates can be changed and the phase-outs. More granular changes or more fundamental changes to the program would need to be done legislatively.

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

I wonder if you can see how that might make it very difficult for the tourism industry to be able to continue if there can't be a targeted way of helping them, because I imagine we can't continue supporting all businesses as things open, but tourism lags. Can you see that this might cause a problem for the tourism industry, which is already one of the most highly affected?

[Maude Lavoie]

I believe how to support the tourism industry going forward is a question for the government at this point.

[The Chair, Liberal, Wayne Easter]

Okay. We are going to move on to part 1(n).

Before I do that, is everyone comfortable going to six o'clock Ottawa time? We can get the extra time, but we can't go that far. I know we're imposing on finance officials in doing that. Is there any opposition to that?

Okay, we'll take the extra half-hour and make up what we lost in the beginning.

Then we turn to part 1(n), “amending the employee life and health trust rules to allow for the conversion of health and welfare trusts to employee life and health trusts”.

Are there any questions?

Ed Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Could we just have the officials explain the ramifications of the last sentence, which addresses a relaxation of the rules as it relates to employee life and health trusts. What are the ramifications of that relaxation?

[Trevor McGowan]

I can provide some information on that. Just for broad context, for many decades there has been a set of health and welfare trust rules that were largely based upon Canada Revenue Agency administrative policy and not a legislative set of rules. In 2010, the employee life and health trust rules were introduced into the act, which provided a specific regime set out in the legislation to provide these kinds of benefits to employees.

What this measure would do is it would provide rules to allow the older health and welfare trusts to transition into newer employee life and health trusts. However, in some cases there were more flexible or more generous sets of rules that were implemented by health and welfare trusts, so some of those are being picked up and incorporated into the new employee life and health trust regime.

The benefits that could be provided under the ELHT rule amendments could allow for death benefits of up to $10,000, paid leaves like bereavement leave or jury duty, and additional counselling benefits for mental health purposes.

[Ed Fast, Conservative, Abbotsford, BC]

Trevor, I do understand that, but this references an expansion of the types of benefits that such a trust may provide to employees and their family members. Can you explain what additional benefits might be provided that are covered? Is there an impact to the fiscal framework by changing that?

[Trevor McGowan]

I would defer to my colleague, Pierre, on the impacts to the fiscal framework.

As I mentioned, the specific types of benefits that could now be provided were the death benefit up to $10,000, paid leave such as for bereavement or jury duty, and counselling benefits for mental health purposes.

[Ed Fast, Conservative, Abbotsford, BC]

That's helpful.

[The Chair, Liberal, Wayne Easter]

Does anybody else want to come in on that from finance?

Is that it, Ed?

[Ed Fast, Conservative, Abbotsford, BC]

Yes.

[The Chair, Liberal, Wayne Easter]

All right. There are no further questions on that one.

The summary of part 1(o) reads, “expanding access to the Canada Workers Benefit by revising the applicable eligibility thresholds for the 2021 and subsequent taxation years”.

Are there thoughts on that one or any additional points by finance? All right.

The summary of part 1(p) reads, “amending the income tax measures providing support for Canadian journalism”. We're all right on that one.

Next is part 1(q), “clarifying the definition of shared-custody parent for the purposes of the Canada Child Benefit”. That's all fine.

The summary of part 1(r) reads:

revising the eligibility criteria, as well as the level of subsidization, under the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS), extending the CEWS and the CERS until September 25, 2021, providing authority to enable the extension of these subsidies until November 30, 2021, and ensuring that the level of CEWS benefits for furloughed employees continues to align with the benefits provided through the Employment Insurance Act until August 28, 2021;

We had considerable discussion on this one earlier. Are there any questions?

Gabriel, did you have question? No. I think we've covered that one pretty well.

Peter Julian.

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

I'd just like a full description of part 1(r), and of course, as we've raised before, the problems with the misuse of the emergency wage subsidy.

The current criteria change for those companies that use it for executive bonuses, I believe after June 5, so the question is what the finance ministry has looked at in terms of making retroactive some of these misuses of the wage subsidy, including dividend payments and executive bonuses.

[Trevor McGowan]

As you noted, the change that can require repayment of the Canada emergency wage subsidy in respect of active employees applies prospectively, starting in June, for those periods of the subsidy, and it operates by looking at the increase in top executive compensation between 2019 and 2021 for certain public companies.

[The Chair, Liberal, Wayne Easter]

Trevor, I'm just going to interrupt for a second.

Matthew with the Conservative whip's office, your mike is on. You might not want us to hear you.

Trevor, go ahead.

[Trevor McGowan]

Thank you, Chair.

It compares the remuneration paid to top executives, generally the top five executives, in a publicly listed company between 2019 and 2021, and to the extent there's any increase in that additional remuneration, it can require a repayment of the wage subsidy for active employees paid during those periods. As you noted, those are prospective in nature and there's no repayment of past wage subsidy claims when companies would not have known about these new restrictions.

Of course, the government looked at a number of options and received feedback from a number of stakeholders, but what is in the bill is the government's response, in particular in respect of excess pay to top executives by wage subsidy recipients.

[The Chair, Liberal, Wayne Easter]

We'll go to Peter, and then we'll go to Ted.

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

Thank you for that.

You said that the government consulted with stakeholders. Did the options that were laid out to stakeholders include the possibility of making these provisions retroactive, given that the government from the very beginning, including the former finance minister, was very clear that this wage subsidy should not apply to dividends and to executive bonuses?

Other countries, of course, put all those provisions in place, so the abuses we're seeing are strictly in Canada. Given that the government said repeatedly that it can't be used for these purposes, to what extent was the government consulting on making the actual components, the tools, to claw back that money retroactive?

[Trevor McGowan]

I don't know.

I apologize if I misspoke in saying there was a consultation in the sense of a formal consultation. Certainly, it is something that was reported in the media and that we heard about: that the wage subsidy had been going to companies that had paid dividends or had increased top executive compensation, or what have you.

[The Chair, Liberal, Wayne Easter]

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Wayne.

With the Canada employment wage subsidy, are there any qualifications in there regarding foreign ownership of a company receiving these benefits? It is a “Canada” employment wage subsidy. If there are no restrictions on ownership, that it has to be a Canadian-owned company or a Canadian-controlled company, can you give us any data on how much of this money that has been invested in the CEWS has gone to foreign-owned companies?