Finance Committee on May 27th, 2021

[The Chair, Liberal, Wayne Easter]

That's natural.

I'll go to Mr. Falk and then I'll ask Mr. Julian to explain his motion so that we know what they're both saying, because one impacts the other.

Go ahead, Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

I'm wondering if we could get Mr. McGowan to weigh in and give his perspective. Does this section deal with publicly traded companies only or does it apply to all companies?

[Trevor McGowan]

The requirement to repay in respect of increases in executive compensation only applies to publicly listed companies and their subsidiaries.

[The Chair, Liberal, Wayne Easter]

I'll go to Mrs. Jansen first, because I think her question relates to that. Then I'll get Peter to explain his amendment.

Go ahead, Mrs. Jansen.

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

I'm really concerned about the concept of doing something retroactively. If there's one thing business needs to function, it's predictability. That's one thing we have not had from many of these programs. Even just to consider a retroactive policy is mind-boggling.

We know that many of the programs were created in haste and had many flaws. We assume that the Liberals had the best intentions of ensuring that the maximum number of jobs were protected during the pandemic. Businesses applied for these programs based on the criteria the government set for them. It's the government that set those criteria, flawed as they were, so you can't go back and blame the flaw on the applicant.

[The Chair, Liberal, Wayne Easter]

I'll go to Mr. Julian's explanation, and then to Mr. Fast.

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

Thanks very much, Mr. Chair.

I would point out, of course, that last June we were considering legislation that retroactively punished CERB applicants, and it was only because of the NDP standing up against that legislation, legislation that would have moved to even include prison sentences for CERB applicants, that the legislation was eventually withdrawn. The idea of retroactivity is something that we've seen this government move on in terms of CERB, not in terms of the wage subsidy.

Regarding the wage subsidy, from the very beginning, members of this committee will recall that when Mr. Morneau came forward, this exact question was asked to him: Are you making sure that there is no possibility of these funds being used for dividend payouts, stock buybacks and executive bonuses?

Certainly other countries put in place a wage subsidy. The NDP pushed the wage subsidy. Jagmeet Singh pushed it because it made good sense to maintain those jobs. However, other countries put in place some protections. Mr. Morneau said at the time that yes, those protections will be in place. At the time, the Liberal government was very clear that it could not be used for those things, those big executive bonuses, dividend payments and stock buybacks.

That is an issue that I think the public is certainly seized with. They expect us to be responsible and expect us to ensure, in a cohesive way, that these abuses that were flagged from the very beginning are actually taken care of.

Mr. Ste‑Marie asked about the difference between his amendment, which is very good as well, and ours.

Our amendment prefers April 15, 2020, for the measure to come into effect. This is really the beginning of the entire application process. It is very clear that business leaders were not supposed to use funds in the Canada emergency wage benefit to issue dividends, pay themselves bonuses or buy back shares.

In my opinion, that is very clear and, in the public's eyes, the measure really must be passed to correspond to the government's intention when the bill was introduced last year.

[The Chair, Liberal, Wayne Easter]

Okay.

Mr. Fast is next.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you.

I will share with members of this committee that I've had calls from some of Canada's largest business organizations, pleading with us, as a committee, not to go down the road of retroactively punishing companies for the program design failures of the government. This is a terrible precedent to set.

Could officials tell us whether there's any past precedent that has seen the government claw back benefits that were paid because of its own negligence or design failures or something similar? I'd be surprised if government has done this in the past, which is probably why we've received these panicked calls from business organizations.

[The Chair, Liberal, Wayne Easter]

Is there an official in the room who wants to take that question?

Mr. McGowan, I hate imposing on you all the time, but I'm going to.

[Trevor McGowan]

There is the possibility of retroactive tightening of tax changes, but as was noted, they tend to be exceedingly rare. Off the top of my head, I can't think of any. I know there is the possibility of doing it, but I can't recall any retroactive tightening of tax changes that would apply in the context of a refundable tax credit that involves the taking back of amounts expended.

[Ed Fast, Conservative, Abbotsford, BC]

Is it possible that it would be legally challengeable if the government implemented something like this measure?

[Trevor McGowan]

I can't provide advice on the merits on any sort of claim against this type of change.

[The Chair, Liberal, Wayne Easter]

I have Ms. Jansen and then Mr. Ste-Marie, and then, hopefully, we can go to a vote.

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

We knew right from the beginning that there were many flaws in the programs. They were rushed, and that created all sorts of problems, but two wrongs don't make a right. This amendment would mean that every program could possibly be altered retroactively. The impact of this kind of instability on our business sector and on our economy would be unimaginable. I mean, you can't change the rules in the middle of the game.

Of course, if someone improperly took program funds, that's one thing, and Canadians expect that you'll collect that back. However, these were the rules that were set, and to now solve the problem by placing the blame on the people who legitimately qualified under the rules is undemocratic and dangerous.

I mean, imagine that the government would suddenly reverse the rent subsidy retroactively on a restaurant if they were able to pivot successfully to online orders. The amendment opens a Pandora's box that we cannot afford to open.

[The Chair, Liberal, Wayne Easter]

Okay.

We have Mr. Ste-Marie, and then Mr. Julian will close it out.

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

Thank you, Mr. Chair.

I want to point out two things about this amendment. First, and this is Economics 101, if the Minister announces in the budget that the emergency wage subsidy will end in June, it does not mean the end of the subsidy. It just means that the deadline for applying will simply be moved up to a point between the date of the budget and the month of June. If we want to stop bonuses being paid, that's the worst way to go about it.

I can understand that, politically, we can say that we have put a measure in place to stop bonuses being paid, but, in reality, we know full well that the payment will simply be moved up. So, in terms of economic policy, the measure could not be worse, hence the need for the amendment.

Second, to my knowledge, amendments remain confidential until they have been introduced at committee. So I find it very curious that company executives were able to call members of this committee to complain about the amendment, which was still confidential until now. I have some serious questions about that.

[The Chair, Liberal, Wayne Easter]

Thank you. That's a very valid point.

Go ahead, Mr. Julian.

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

Mr. Chair, I share Mr. Ste‑Marie's opinion. Amendments are indeed confidential, so it is a little curious that members have received calls from company executives. Personally, I have not received any calls.

Nevertheless, we have seen cases of retroactivity for certain measures before. They have been examined in Canadian courts. You just have to look at the Canadian Tax Journal to find a number of such cases. So retroactivity is nothing unusual.

[The Chair, Liberal, Wayne Easter]

All right. I still see people who have their hands up.

I will go to Mrs. Jansen and then Mr. Fast.

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

I'm just really worried about driving populism with something like this. You're making business owners, who fought hard to maintain Canadian jobs during lockdown by legally utilizing the available government programs, into the evil villain. It only leads to serious market insecurity and damages our reputation abroad.

Who would want to do business in such an unpredictable environment as this? Are we trying to chase jobs away? This government needs to continue to protect jobs and the businesses that maintained those jobs during the pandemic.

Today we heard from the PBO. He reported that the budget plans to spend $150 billion and will create only 66,000 new jobs. If you do the math—

[The Chair, Liberal, Wayne Easter]

Ms. Jansen, I'm going to have to start keeping people right on the motion, because when we're dealing with clause-by-clause study, we're not going to get into political debates and what the PBO said. We're straying.

Go ahead.

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

I'm just really worried. Job creation isn't the government's forte, so we need to let business work to create jobs and not punish them for program failures.

[The Chair, Liberal, Wayne Easter]

Okay.

Go ahead, Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Chair, did you just rule that political debates over a budget bill are not acceptable?