Finance Committee on May 18th, 2021

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you.

We touched upon it, and I heard some comments on the tourism relief fund. The budget proposes an investment of $500 million through the tourism relief fund to help local businesses adapt their products and services.

How do you see your members making use of this fund to adapt and improve their operations?

[Susie Grynol]

The details have not yet been released on who can access it and for what reasons, so we'll have to wait and see what the details are.

I do hope that there is some benefit to our members, but when you do the math, it's a smaller investment. It's helpful, but it really doesn't solve the bigger problem that we're going to have an entire industry with very little movement in the summer and the critical support programs, like CEWS and CERS, are going to be winding down at that time. That's the biggest issue that we need to solve. We need a plan for how to address that in the fall.

[Annie Koutrakis, Liberal, Vimy, QC]

I think we're going to do great with the vaccine rollout. We're going to ramp that up, and you're going to see that we're going to open up our economy a lot faster than what people think.

[The Vice-Chair, Conservative, Pat Kelly]

All right. With that, we'll have Mr. Ste-Marie for two and a half minutes, and Mr. Julian for two and a half. Following that, we will have time for one question from Mr. Fast and one from Mr. Fraser, if he would like to ask a question. I think he wanted to get in.

That being said, go ahead Mr. Ste-Marie.

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

Thank you, Mr. Chair.

Far be it from me to question your decision. I'll be very happy to accept your decision if you stick to it. However, normally, unless I'm mistaken, I wouldn't have another turn to speak to this panel. I had an initial turn and then another two and a half minutes. The Conservative Party and the Liberal Party would then have the next turns until 4 p.m.

[The Vice-Chair, Conservative, Pat Kelly]

I think you had a round following the Conservative and Liberal questions each time. This is going to be just the last single question we have for the last two minutes that follow Mr. Julian.

[Sean Fraser, Liberal, Central Nova, NS]

I have a point of order, Mr. Chair.

I may be able to solve this problem. Having missed the opening testimony and most of the discussion because I was busy getting my vaccination, I feel ill-equipped to ask questions. For the sake of the additional minute, I will give my time to Monsieur Ste-Marie, if that would allow him to finish his questions.

[The Vice-Chair, Conservative, Pat Kelly]

I think what we'll do, then, given that we've just burned about a minute.... The real point that I wanted to squeeze in the last bit was to make sure you didn't miss your opportunity for a question. With the few minutes we have left, we will have, as the last two speakers, Gabriel Ste-Marie and Peter Julian.

Go ahead, Mr. Ste-Marie.

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

Thank you, Mr. Chair.

I want to congratulate Mr. Fraser on his vaccination. We're on the right track.

Mr. Telles, a number of economists and analysts say that the economic recovery and the end of the crisis will be a K-shaped process. Some will come out ahead or will benefit from it, while others will have difficulty recovering or will take longer to do so. One example is the industry that Ms. Grynol represents, where it will take longer to get back to full employment levels. We need to provide all the support needed for this industry, because we can't do without such important industries.

Mr. Telles, it seems that many young people aren't part of the group that will emerge from the crisis the fastest. What are your thoughts on this?

[Simon Telles]

Thank you for the question.

I share your thoughts. I know of few, if any, young people who have improved their living conditions during the pandemic. Instead, we've seen young people who had to study remotely throughout the year; young people who lost their jobs; young people who had to temporarily put their life plans on hold, such as buying a house, starting a family and travelling; young people who lost job opportunities; young people who are struggling to find housing now; and young people who have mental health issues. That's the reality. Young people haven't benefited from the pandemic. On the contrary, the pandemic has exacerbated all the vulnerabilities that come with their life situation, where they're at a bit of a crossroads, facing many opportunities. All this has worsened over the past year.

So, no, the situation of young people hasn't improved. That's why we're asking for a particular focus on them and a targeted strategy to help them in all the programs implemented by the federal government.

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

Let's hope that your message is heard. The committee can certainly invite you back, since you have a great deal to contribute to the debate. Intergenerational equity is very important.

Thank you, Mr. Telles.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, Pat Kelly]

Thank you.

To take us home here, go ahead, Mr. Julian.

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

Thank you very much, Mr. Chair, and thanks again to all of our witnesses for their very compelling testimony.

I haven't asked a question yet of Ms. Hnatiw.

I would like to come back to the issue of broadband and Internet telecommunications. The cost that Canadians pay is much higher than elsewhere in the world. A variety of other countries have brought the costs down. Sometimes it's by a combination of public investment and private investment. Sometimes it's by clear regulation around that.

First off, do you find the cost per person in your area, for example, daunting? I know that many of my constituents do. The cost to access telecommunications is through the roof.

Second, do you think that we should be looking at all possible solutions so that we can actually provide support for broadband right across the country and make sure that all communities can benefit from that and that Canadians have access to technology?

[Alanna Hnatiw]

Because of the diversity across this country in geography and density, we will be required to use a number of different technologies. Speaking from my own personal experience, I can drive to downtown Edmonton in 25 minutes and from parts of the county I can even see downtown Edmonton, yet after spending upwards of $120 a month, I still couldn't get download speeds that were greater than seven. They were usually around two, and this was in off-peak hours.

Fortunately I was in the catchment area that was able to use the beta Starlink tests, so for an extra $750 I got the equipment. I have certainly seen a remarkable increase in my connectivity. I have upwards of 80 to 150 download speed, which has been very beneficial for me in being able to work from home, although I wouldn't trust it enough to take this call from home. I drove in to the office in town for it.

However, I have a university-aged son at home who, along with his friends, had a very stressful year making sure that he was able to get his tests done. Sometimes they have an hour allotted to do their work and submit, and often the connection is lost and he can't submit the work. I know there have been a tremendous number of issues connected to the frustrations around Internet, and I know they feed into the growth of mental health issues, which Mr. Telles has spoken about.

In the last six months, we've had three suicides within 20 square kilometres. These people were between the ages of 16 and 18. One was in a rural community, one in a town and one in a city. Across the board it's critical that we get mental health and other health products to isolated people. I think the next pandemic will be around mental health, so we need to be able to meet people where they are and perhaps give them the ability through Internet to access mental health care, among other things. This is going to be so vital for our future.

[The Vice-Chair, Conservative, Pat Kelly]

Thank you very much, Ms. Hnatiw, for that response.

We went a little over time with Mr. Julian, but that's all right. We have about a minute to spare and I think we're ready to suspend the meeting. I see that our chair has returned, so with that I will suspend the meeting and relinquish the gavel.

[The Chair, Liberal, Wayne Easter]

We will reconvene the meeting.

Thank you, Pat Kelly, for chairing the last session.

Welcome to meeting number 46 of the House of Commons Standing Committee on Finance. We are meeting on Bill C-30, an act to implement certain provisions of the budget tabled in Parliament on April 19, 2021 and other measures, and we're meeting in the hybrid format.

With that, we will go to our first witness. If you could keep your comments to around five minutes it would leave plenty of time for questions. We'll start with Nancy Wilson, founder and chief executive officer of the Canadian Women's Chamber of Commerce.

Ms. Wilson, you're on. I believe you've been here before as well.

[Nancy Wilson, Founder and Chief Executive Officer, Canadian Women's Chamber of Commerce]

I have, yes. Thank you, Mr. Chairman and members of the committee.

I did appear before this committee about a month ago, just prior to the release of the federal budget. When I appeared the last time, I articulated the need for our government to reinvest in the women entrepreneurship strategy and direct significant funding to support the recovery of women-identified business owners.

In my comments today, I want to touch on three things in particular: child care, program design issues and, of course, the women entrepreneurship strategy.

I know that I'm here to comment on and answer questions about child care. The early learning and child care program announced in the budget certainly has the potential to advance gender equity and equality in Canada if it is implemented thoughtfully. To truly move the needle, the program must be designed in a way that supports all types of workers of all genders and, of course, contributes to a healthy and safe start for children.

As I've said before and said the last time I appeared before this committee, affordable and accessible child care is critical for advancing gender equality and equity, but it is not a panacea. If a national child care program had been implemented 50 years ago, per the recommendation of the Royal Commission on the Status of Women, the pandemic would still have sent children home and closed child care centres. What might have been different, however, if we entered the pandemic with 50 years of universal affordable and accessible child care?

We may have had different gender norms, a greater percentage of women in senior management roles and perhaps a different value assigned to women in the economy. It is these systemic and cultural changes that would have mitigated or even prevented the “she-cession” that we face today, not the existence of child care alone. What I'm trying to say is that there is more to be done.

When I read through the proposed budget, unfortunately I see many of the same missteps and errors that occurred in 2020. The financial supports and programs being put forward to support recovery are simply not designed to include women and racialized business owners.

An example is the Canada recovery hiring program. The purpose of this program is to help small businesses recover and grow, as well as increase employment opportunities for individuals. Many women-owned businesses in the service sector have few or no employees and instead engage in contracts of varying lengths with freelancers. If the Canada recovery hiring program was expanded to include this type of independent contract or arrangement, it would support more businesses in their recovery and provide self-employment opportunities to freelancers. This is just one example of how accessibility and design are critical at the planning and implementation stage and why women, racialized and other underserved businesses are becoming more marginalized and left out of recovery.

With respect to the women entrepreneurship strategy, it is my opinion that the 2021 federal budget fails women-identified entrepreneurs by allocating an incredibly small amount to the women entrepreneurship strategy. It is approximately $150 million over the next four years, which is less than $40 million a year. This is following a year in which all evidence indicates that women, including women business owners, have been hit the hardest, have been excluded from financial supports and have been forced to take on additional care responsibilities, reducing the time they can spend on their business. After a year when so many women have been so significantly impacted, I expected a significant sign of support from our feminist government.

The stated objective of the women entrepreneurship strategy announced in budget 2018 was to double the number of women entrepreneurs by 2025. By launching this strategy and announcing this goal, the government encouraged women to take the personal and financial risk of becoming an entrepreneur. When an unexpected global disaster struck two years later, where was the support for these two-year-old businesses' owners? Where is the support now to rebuild and recover those businesses?

When one of those business owners has to claim personal bankruptcy and the corporation shares or the sole proprietorship net assets are sold as part of the bankruptcy, will the government intervene? When that woman's personal credit is reset to the lowest score, and securing housing or an automobile is a challenge, let alone achieving her entrepreneurship and business ownership goals, what is the government's responsibility to support that individual?

We are seeing women close their doors or walk away from their businesses at rates we cannot accept. I challenge the government to take action, to do better and to support these business owners.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Wilson.

We'll turn to Kim Moody, CEO and director, Canadian tax advisory with Moodys Tax Law LLP.

Welcome back, Mr. Moody.

[Kim G.C. Moody, Chief Executive Officer and Director, Canadian Tax Advisory, Moodys Tax Law LLP]

Thank you, Mr. Chair, and good afternoon committee members. Thank you for the opportunity to discuss Bill C-30.

As introduced, I'm Kim Moody. I'm a CPA and the CEO of Moodys Tax Law and Moodys Private Client in Calgary, Alberta, although I'm in snowy Edmonton today. I have a long history of serving the Canadian tax profession in a variety of leadership positions, including chair of the Canadian Tax Foundation, co-chair of the joint committee on taxation of the Canadian Bar Association and CPA Canada, and chair of the Society of Trust and Estate Practitioners, to name a few.

Given the limited time that we have this afternoon, I'm going to keep my opening remarks rather short and briefly comment on three matters: the size of the projected deficit; the length of the bill, which is 366 pages; and the amount of time it took to produce the federal budget.

Let's start with the projected size of the deficit.

While I'm not an economist, I feel compelled to comment on the size of the projected deficit as projected for the upcoming year. It will be an astounding $155 billion, after a record deficit of roughly $354 billion in the previous year. While proponents of modern monetary theory, MMT, may not have any concerns about such deficits, I think the more rational and reasonable person has issues with the size of the deficits and what the future implications of running such high deficits might be for our country. Count me and 74% of Canadians in the camp of those who are concerned, according to a recent poll conducted by Nanos for The Globe and Mail.

While some argue that current low interest rates make such deficits and lending possible, should inflation and interest rates increase, Canada can expect significant negative implications. In my view, control over the deficit, meaning reducing the size of the deficit, should be an immediate priority so as to reduce risk that future borrowing costs do not compromise essential government services.

Next, let me quickly comment on the length and content of the income tax measures contained in Bill C-30.

Some of the measures have been previously announced, such as the stock option measures, and are consolidated in this large bill. Some of the measures are welcome, such as the accelerated capital cost allowance deduction for certain depreciable capital property. Some of the measures are unwelcome, such as the amendments to the absolutely horrible Canadian journalism tax credit regime. Other measures are technical amendments, such as the amendments to enable the conversion of health and welfare trusts to the employee health and life trust regime. All told, there are 30 income tax measures in the bill, which is not an insignificant number of amendments, and they're all packed into a 366-page document.

With such a massive bill, I query whether any parliamentarian can realistically understand every proposed amendment and intelligently comment, and thus vote, on its contents. In my view, to intelligently understand a bill, such measures should be broken up into bite-sized pieces in order to accommodate proper understanding and passing of laws. Having said that, I do appreciate that the business of government needs to proceed for the benefit of Canadians.

This leads to my third and final comment. March 19, 2019, was the last time, prior to April 19, 2021, that the federal government released a budget. That's a record, as we all know, and our government used COVID as the excuse for not releasing a plan. As I've stated at this committee before, former parliamentary budget officer Kevin Page said in October 2020, budgets “are fiscal plans. And to say that, ‘because there’s too much uncertainty, we’re going to manage without a plan’, is kind of bizarre.... The reason we have plans is because there is uncertainty.”

I absolutely agree. In this day and age of uncertainty, prudent fiscal budgets and plans are needed. After reading the 700-plus pages in the 2021 budget, it's difficult to see a prudent plan other than massive spending. Canadians deserve more than just a massive spending budget. They expect timely and well-thought-out budgets accompanied by intelligent plans that encompass possible shock factors such as high interest rates and inflation increases.

Never again should Canadians need to wait two-plus years for a budget. In fact, it would be my recommendation to make the timely delivery of a budget a law. Fixed budget days should also be considered.

Finally, as many presenters have told you in the past, this country needs comprehensive tax review and reform. Your committee has recommended this very thing and so has the Senate finance committee. Perhaps there is something to all the smart people who have appeared before this committee. Rather than wading through a 366-page bill with 30 income tax amendments, Canadians expect and demand real and comprehensive change.

Forget the cries for patchwork quilt fixes like those contained in this bill. In my opinion, it is critical for our country's fiscal future to engage in comprehensive tax review and reform. The time could not be better.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Moody.

We'll now turn to the Public Service Alliance of Canada, with Mr. Aylward, the national president.

[Chris Aylward, National President, Public Service Alliance of Canada]

Thank you, Mr. Chair and members of the committee.

My name is Chris Aylward and I'm the national president of the Public Service Alliance of Canada. We represent 210,000 workers across Canada, most of whom work in the federal public service, but we also represent workers in the broader public sector and in the private sector.

Bill C-30 covers a lot of ground, as it should. These extraordinary times require extraordinary government intervention. The pandemic exposed many fault lines. Seniors became infected and many died in long-term care facilities because of numerous government policy failures. Low-wage workers, the majority of whom are women, Black, indigenous, Asian, racialized and people with disabilities, have suffered tragically and disproportionately because government policy has failed to address inequities embedded in every one of our systems. Now is the time to correct the mistakes of the past.

We welcome the promise of national standards for long-term care, although we regret that funding will be delayed until 2022. Despite its absence in the legislation, we hope the government will reconsider its efforts to improve long-term care by working to end the public sector pension plan's ownership of Revera Incorporated. Instead, let's put the second-largest Canadian network of for-profit long-term care facilities under public ownership and control. Revera is a wholly owned subsidiary of the Public Sector Pension Investment Board, which manages the investments of the pension plans of the federal public service, the Canadian Armed Forces, the Royal Canadian Mounted Police and the reserve force. PSAC made the call for a change in ownership of Revera as a result of mounting evidence that the incidence of death and illness attributable to COVID-19 is disproportionately large in private, for-profit long-term care facilities.

We are glad to see that workers will continue to see temporary support during the pandemic, but we also need far-reaching permanent improvements in income programs such as employment insurance. A federal minimum wage is a very good thing, but $15 an hour is still a low wage. Workers deserve a budget that creates conditions for decent jobs, paid sick leave and decent pay and benefits in every jurisdiction.

Also, the budget does not deliver the national pharmacare program that the government's own commission recommended. This will undoubtedly continue to create financial hardship and will lead to worse health outcomes for millions of Canadians. Nobody should choose between paying for critical medicine and paying for groceries, or have to skip prescription refills to pay the rent.

The transformative element of budget 2021 is the promise of a Canada-wide system of early learning and child care, backed by $30 billion over the next five years. Bill C-30 authorizes transfers to the provinces and territories of $2.9 billion in 2021-22, to be paid according to terms and conditions set out in bilateral agreements. PSAC started campaigning for federal action of this magnitude 40 years ago. Lowering parents' fees to an average of $10 a day while expanding the number of licensed child care spaces will bring down the obstacles stopping mothers from participating fully in the paid labour force. It will increase the social and economic security of women and will especially help those who now suffer the greatest inequity.

Furthermore, increasing women's access to paid employment will give the economy a huge boost now and in the future. The global pandemic has demonstrated this without question. When child care disappeared during multiple rounds of lockdowns and outbreaks, women were the ones most impacted and forced out of the workforce. The economic loss was immeasurable.

However, to realize these benefits, the federal government must use its $30 billion to negotiate meaningful changes in how child care is delivered. The economy needs a secure supply of publicly funded and managed child care. It should be predominantly not-for-profit or public. The quality must be high, and those who work in child care must be qualified and paid accordingly. The project is ambitious and expensive, but if done right it will pay for itself. We urge you to support it and hold the government to account for building the child care system Canada needs and wants.

Lastly, despite some gaps, we applaud the government's efforts to continue to work at increasing equity for all Canadians. We support the commitment to combatting systemic racism and anti-Black racism, both in the federal public service and across Canada.

We're encouraged by the funding dedicated to ensuring the rights of those living with disabilities, funding in support of the work of the LGBTQ2 secretariat and the development of an action plan, as well as continued funding to address long-standing issues in indigenous communities.

Mr. Chair, thank you for your time. I look forward to any questions.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Aylward.

We are turning to another witness who was here not too long ago. From the Tourism Industry Association of Canada, Beth Potter is president and chief executive director.

Welcome, Ms. Potter.

[Beth Potter, President and Chief Executive Director, Tourism Industry Association of Canada]

Thank you, Mr. Chair.

Mr. Chair and committee members, I want to thank you for inviting our association to appear today.

Yes, I've been here before, and I'm here again. The Tourism Industry Association of Canada, or TIAC, is the national voice of the tourism industry and has been actively calling for sector-specific support for the tourism economy since the onset of the pandemic.

We were pleased to see specific mention and support outlined for tourism in last month's budget, and we are here today to discuss the work still to be done if we want Canada's tourism economy to regain the momentum we had prior to the pandemic.

The budget proposed many supports that impact our sector, but today I will focus on a few pertinent measures, including the tourism relief fund and the Canada emergency rent and wage subsidies.

The $1-billion package of tourism supports over three years is very promising, but we are still working to understand the details around these supports and how they will be administered to truly recognize the help they provide to tourism. The same understanding applies to the proposed funding for the festivals and events. We need to make sure the unique needs of our industry are met. The $500-million tourism relief fund through the regional development agencies will be a great help to businesses if this money is grant funding and if we encourage a national approach to the administration so that RDAs follow the same policies across the country.

We want to ensure that all sectors within tourism have access to these funds, including business events, anchor attractions and fly-in fishing camps. We cannot ask businesses that have been forced to close and that have generated little to no revenue over the past 15 months to blindly undertake more debt without any road map to recovery and with no ability to forecast.

We continue to work with government on these details and we ask that the tourism industry be consulted prior to the details being finalized. As we have seen with HASCAP, there are unique situations for tourism businesses that must be accounted for. The HASCAP program was an extremely welcome program; however, industry feedback suggests that the program has not been utilized as predicted due to challenges like debt service ratio issues, which are prevalent in our sector, with large capital assets like boats and float planes. We ask that this issue be looked at and remedied before the deadline.

We have seen that the lack of access is exacerbated with regard to indigenous tourism businesses, and we must make sure, moving forward, that the necessary financial support for indigenous tourism businesses also rolls out effectively and ensure that access through aboriginal financial institutions is secured.

The emergency wage and rent subsidies have been a lifeline to so many of our businesses, and while we welcome the extension of the programs, the impending fall timeline and the decline in support levels are big concerns for our industry. Our businesses will not be in a place where support is no longer needed as of September or even November. Some sectors such as the cruise industry are completely shut down until at least spring of 2022. In addition, many of our members are seasonal businesses that must be accounted for with support programs. Their means and timing of revenue generation are different from those of most others, and they are looking at a second summer season being lost.

The new Canada recovery hiring program is positioned as somewhat of a bridge from the declining subsidy programs; however, the timing requires that businesses be reasonably financially sound by June in order to take advantage of the program. Additionally, as most tourism businesses now have limited or no cash flow or reserves, they may simply not be able to afford workers even if the 50% subsidy is in place. That being the case, we are strongly recommending that the CEWS and CERS programs continue for tourism businesses at existing levels for as long as they are needed, taking into account that these are seasonal businesses; that the tourism relief fund be administered through the RDAs under a national approach as grant monies; and that HASCAP be amended to allow for tourism businesses with debt service ratio implications to qualify.

As we look ahead, our number one priority is getting back to business at full capacity. When we compare proposed supports in the budget to the timeline of proposed declining supports for businesses, we see that they don't match up. We are asking government to put a line in the sand and to name a target date for border reopening, which will include a definitive plan for proof of vaccination for international travel, testing requirements and elimination of quarantines. Our businesses do not turn on with the flip of a switch. We need time to recontract, remarket, retool and rehire, and we need time behind the scenes to do things like test the rides at the amusement parks that have been closed for a year, fill the splash park pools and retrain pilots.

TIAC recommends that Canada work with counterparts on solutions to ensure that we are on board with the global system and that we remain part of the seamless traveller experience.

We are also advocating for a “one Canada” travel policy. We ask the government to work with the provinces and territories to open their borders and avoid interprovincial travel testing and quarantining, which will provide confusion to both domestic and international travellers.

Finally, changing the narrative and supporting consumer confidence will be a critical piece. As we see case counts decline, we are asking government to lead the way to the return to travel and to encourage Canadians to travel within Canada. When restrictions are adjusted, our businesses will be ready to offer services and experiences while following all of the necessary health and hygiene protocols.

Much investment and creativity has gone into preparing for a recovery. The tourism economy is ready to put Canada back on the map as a competitive destination.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Potter, and thank you to all witnesses who made a presentation.

We'll start with a six-minute round, and Mr. Kelly will be up first, followed by Ms. Dzerowicz, Mr. Ste-Marie and Mr. Julian.

Pat.

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

Thank you. I'm going to try to use my time as efficiently as I can and maybe get several witnesses involved.

I'm going to start with Mr. Moody. Since you singled out the journalism tax credit regime for criticism and did not have time to elaborate, I'll let you go for it. Tell us what's wrong with that tax credit.