Finance Committee on May 20th, 2021

[Daniel Kelly]

I certainly agree with that sentiment.

As I said in my presentation, the average small firm has inherited $170,000 in COVID-related debt. We at CFIB are projecting 180,000 permanent business closures as a result of the pandemic, and that data was collected prior to the third wave, so I suspect both are far worse than that.

The only thing that's going to make a meaningful difference is if governments—federal and provincial—can themselves take on some of the debt that small businesses are grappling with.

The recovery is going to start with allowing businesses to reopen their doors—many of them have been shuttered in retail, hospitality, the service sector, and arts and entertainment—but that's only step one.

Step two is ensuring that we can go back to asking Canadians to return to these very businesses. Until stay-at-home orders and the advice to Canadians to stay home and avoid going out end, we cannot start to pull back on these subsidies. It was the Deputy Prime Minister herself who said that it would be monstrous to not provide supports to businesses when, through no fault of their own, they are being asked to close. The government is pulling that back too fast.

[The Chair, Liberal, Wayne Easter]

Next we have Restaurants Canada.

[Olivier Bourbeau]

We understand that the government would like to stop the wage and rent subsidies in September because that is the target date for vaccinations to be completed.

That said, since the restaurants will reopen, maybe at the end of summer or gradually, September does not mean that we will be operating at 100% because, with this tenseness, we will operate at 50% or 60% maybe. An average restaurant will not go back to profitability until at least 12 months have passed, which is why we definitely need that support to not only not be phased out but also to be extended until April 2022.

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

You will see 50% of restaurants closing if the supports are not put into place.

[Olivier Bourbeau]

That is correct. As we speak, half of the restaurants are at high risk.

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

Thank you.

Ms. Lamonde, I'll ask you the same question. Under Bill C-30, the government will be drastically cutting supports for individuals and businesses, including start-ups, in the next few weeks. How is that going to affect start-up ecosystems in Quebec and other parts of Canada?

[Liette Lamonde]

Ending those supports clearly puts start-ups and small businesses alike at risk. I'm not sure who, but someone put it well earlier. They said what mattered was the business's drop in revenues, whether it continued or not. That is what the government needs to keep an eye on; that is where help is needed to offset the impact. Obviously, businesses are not going to bring in the same amount of revenue they did pre-pandemic as soon as the supports come to an end.

Yes, there is no doubt that the end of the supports puts businesses at risk. As I said, luckily, many start-ups have managed to find other sources of revenue, but those may not be enough.

[The Chair, Liberal, Wayne Easter]

Thank you, all, on that round.

We'll go to Pat Kelly and a five-minute round, followed by Sean Fraser.

Pat.

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

Thank you, Mr. Easter. I will address my questioning mostly to the other Mr. Kelly with us today.

I'm really glad that you mentioned the lack of response to new businesses so stridently in your opening statement. This is something that all opposition parties have raised repeatedly at committee and in the House of Commons. Back in February, or March, I think it was, the parliamentary secretary for small business claimed in a response to my question, that they were just on the edge of coming up with a response for new businesses, and then nothing happened. Now they're back to just completely ignoring new businesses that have fallen through the cracks of all the aid measures.

We're going to have questions in a moment from Mr. Fraser. He, as the parliamentary secretary, has been part of this ignoring or pretending that there is something out there.

Do you want to comment further about the way new businesses are not being reached?

[Daniel Kelly]

Yes, this has been a giant issue right from the very start of the pandemic.

I will say I do believe that most members of government, most ministers, are quite sympathetic to this. All of them have said to me many times that they're working on it; they're thinking about it; and they need a solution here. However, it does feel like the energy in fixing government support programs for small businesses has ended.

There was good energy in the fall, especially when the Deputy Prime Minister took the reigns at Finance. She did fix many of the gaps in some of the programs she inherited. There was progress being made, but when the new year hit, it felt as though the federal government said, “We're done. Businesses: you have what you have. We'll renew these programs a little bit longer, but—”

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

Just hang in there.

[Daniel Kelly]

There are huge swaths of the business community—not just those new businesses, but others too—that when they hear the Prime Minister and others say, “We've got your back, small business owners,” it really burns them because they are not getting any of the support that they need.

It's not just the federal government. It's the provinces, too. There are lots of holes in all the provincial programs, including those run by Conservative governments. We have to fix them. This is an emergency, for goodness' sake.

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

We've heard some responses to our questions about businesses that have fallen through the cracks, either because they were brand new enterprises in March 2020 or for other reasons, being directed to programs that they still don't qualify for, for the same reasons that they....

Can you comment on that?

[Daniel Kelly]

Yes. I understand than an MP wants to provide a constituent with an avenue that might work for them. They don't qualify for the wage subsidy, so the MP says to apply for the CEBA loan. The business owner then spends a week trying to sort through all the details of the CEBA loan program only to discover that they're also not eligible for that. Then they go to the rent subsidy. Then they go to the HASCAP program.

It's been really painful for these businesses. They've come to us. Last year, we took over 80,000 calls from small-business owners, trying to provide them with some guidance into the support programs that work for them.

There are lots of good support programs, and businesses have received a lot of aid: 70% of our members said they would have collapsed by now had the federal government not created some of the programs it did. We can't just be satisfied with that. We have to fix the programs.

Even now, at this late stage in the pandemic, if we can get some money to these new businesses, they have a greater chance of being able to survive—because that debt has not gone away—allowing them access to some of these programs. We've laid out some detailed possibilities for government to consider. That would be super helpful.

I'm really begging you, as parliamentarians, to put pressure on the ministers to make this happen.

[The Chair, Liberal, Wayne Easter]

You have time for a quick question, Pat.

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

The chamber has talked about the necessity for a reopening plan. Parliament debated a motion on compelling the government to table a data-driven plan for a safe and permanent reopening of the economy. You support this, I presume. Could you tell us if you agree that this is important, and then talk about why?

[Daniel Kelly]

Is that directed at me, Mr. Kelly?

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

Yes. Go ahead.

[Daniel Kelly]

Okay.

Yes, we in fact did sign a letter with the Canadian Chamber of Commerce, the business council, the aboriginal business association of Canada and 60 others.

Bob, I think you're on that letter too.

Most business associations in the country signed a letter urging the federal government and provincial governments to lay out the road map. Quebec has laid out I'd say a decent road map to getting its business community open. Saskatchewan has done the same. Ontario just tabled a terrible one earlier today. We've not heard anything from the feds other than a few broad messages.

Canadians and Canadian business owners needs to hear about the light at the end of the tunnel. What are we going to be able to do? We know that we can't hold government to the letter or to the date to a T, but giving us the broad direction would be immensely helpful for businesses to make decisions.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

I read the letter, and we met with some American senators this week.

Next is Mr. Fraser, followed by Mr. Ste-Marie.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you, Chair.

My first questions are for the Canadian Chamber of Commerce.

Mr. Gill, I'll start with you. In response to Mr. Fast at the outset of the question and answer period of this meeting, you indicated that in your opinion there was no fiscal anchor in the budget. I'd like to read one piece from the introductory section of the budget. It states the following:

The government is committed to unwinding COVID-related deficits and reducing the federal debt as a share of the economy over the medium-term. This fiscal anchor will continue to protect Canada’s low debt advantage so that borrowing costs remain low, and future generations are not burdened with COVID-19-related debt.

Earlier this week, the former Governor of the Bank of Canada, Mr. Poloz, stated this before our committee:

A credible fiscal plan in which the level of government debt relative to national income stops rising and debt service costs are manageable meets the minimum—or, we should say, perhaps technical—standard of sustainability. I draw your attention to the table on page 328 of the budget, which shows that these criteria are met.

He's talking about that same fiscal anchor and declining debt-to-GDP ratio over time. Is it the view of the chamber that a declining debt-to-GDP ratio is not a fiscal anchor?

[Patrick Gill]

The Canadian Chamber acknowledges that the budget sets out a plan to reduce the federal deficits over the medium term, and welcomes that the fiscal projections have been brought forward once again in this upcoming budget. From the chamber's perspective, it's highly desirable to have that fiscal forecast and those guardrails in place. We had just pointed out that it would serve warranting a more concrete fiscal anchor in which to tie debt-to-GDP ratio in the future, as some other provincial governments have done.

[Sean Fraser, Liberal, Central Nova, NS]

Look, I'm not trying to be tricky or to put you on the spot too hard. It's just that the declining debt-to-GDP ratio was the pre-pandemic fiscal anchor. To reiterate the question, as I found your response a little difficult to discern: Is it your view that a downward-trending debt-to-GDP ratio is not a fiscal anchor?

[Patrick Gill]

No. As stated before, from the Canadian Chamber's perspective, that is a fiscal projection and a worthy one.

[Sean Fraser, Liberal, Central Nova, NS]

Okay.

I'll stick with the Canadian Chamber. I can't remember if it was you, Mr. Gill, or Ms. Drigola who talked about the need for a reopening plan. I'm looking sincerely for your advice on this point. You described, I believe, the need to work with the provinces and territories to outline a clear plan.

Mr. Kelly, if you have advice on this point as well, I'd be happy to take it.

One of the challenges I have.... I come from Atlantic Canada, and we've benefited from, I might dare say, a better public health response than much of the country. Although my province is currently in lockdown, we're already seeing a very serious downward trend in cases. Knock on wood, I hope it continues. I don't want to find myself in a position where we get caught up in trying to establish uniform criteria that would end up delaying the reopening of businesses that could be opened potentially this summer and have customers rather than subsidies keeping them alive.

Do you have advice on how we can establish safe reopening criteria that protect the advantage of jurisdictions that are able to open because the public health situation is perhaps not as severe here as it may be in other parts of the country?