Finance Committee on Oct. 8th, 2024

[Martin Roy]

Okay. Excuse me, I am speaking too loudly.

I was saying that inflation had led to cost increases of 30% to 40%. It really costs a lot more in 2024 to do an event in comparison to 2019.

Festivals and events generally rely on sponsors and grants. However, we know very well that sponsors and granting agencies have not increased their contributions by 30% to 40%.

That is the crux of the problem. This is not a Canadian or Quebec problem, but an international one. I read the headlines every day and I see the same thing happening even in Australia, for example. Festivals around the world are affected by this phenomenon. It is very dangerous for the future of the industry.

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

So the same event costs 30% to 40% more, but the revenue from sponsors or grants has not increased by the same percentage. So there is a shortfall, which puts you in a difficult situation.

Were there any events or festivals that had to be cancelled? If so, can you tell us about it?

[Martin Roy]

Every day or every week, I see in the newspapers that events are being cancelled or postponed across Canada, in your ridings, ladies and gentlemen. I drew up a list of them in the brief.

Think of the Taste of the Danforth festival in Ontario, which was cancelled in 2024, the Just for Laughs festival, which experienced the problems you know about, or the Hot Docs festival, which laid off staff. The Toronto Fringe Festival had to cut back in 2024. The Regina Folk Festival was paused in 2024. In British Columbia as well, many festivals are in trouble, including the Vancouver Folk Music Festival. The same is true of the Edmonton International Fringe Theatre Festival, which had to rely on donations from the public for its latest edition to take place.

So the problems are widespread. They are everywhere. As I said, articles on the topic are published around the world, particularly in specialized journals.

One is entitled, “So many music festivals have been cancelled this year. What's going on?”

We are really going through a very difficult time. This is particularly the case for events that are supported by Canadian Heritage's building communities through arts and heritage program. Before the pandemic, these events were receiving $110,000; today, they are receiving $50,000, whereas they should be receiving $150,000 based on inflation, but the grant has not been indexed. There is a decline not only in constant dollars, but also in current dollars. There is a desperate need. We receive about a third of the subsidy we had before the pandemic in constant dollars.

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

You said it well in your presentation. The overall funding is the same, but an event that used to receive $110,000 now receives $50,000. Costs have gone up 30% to 40%, but events are getting less money. That is a problem.

You also raised the issue of the lack of predictability and the uncertainty that it creates. The funding you were talking about was renewed for two years, but, once again, there is uncertainty.

What does that entail? What impact do the lack of predictability and all the uncertainty related to the program have on the events you represent?

[Martin Roy]

Obviously, like any business, organizations such as festivals and events are trying to implement a development plan, a growth plan, and have short, medium and long-term objectives. Unfortunately, there is no predictability in terms of public assistance. Indeed, since 2019, amounts were added to the budget bases, but it was done only for a year or two. We always have to start over. It really discourages people in festivals and events, because there is no predictability. The additional amounts should at least be part of the budget base.

I am not just talking about festivals and events. Of course, a number of organizations are supported by the Canada Arts Presentation Fund or by BCAH but they are presenters, promoters from across Canada. Here again, in each of your ridings, you have theatres and event planners who do as much as possible for culture. They are the ones who are really struggling right now.

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

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

We'll now go to MP Davies, please.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here.

First, to the Canadian Urban Transit Association, in your pre-budget submission, you noted that the sunsetting of the investing in Canada infrastructure program in March 2023, combined with the planned rollout of the $3-billion annual Canada public transit fund in April 2026, results in a significant infrastructure funding gap for public transit projects that you say must be filled.

Could you quantify this infrastructure funding gap?

[Kelly Paleczny]

I don't have a number off the top of my head. It's certainly something we could provide after the fact, but the timing of the gap has essentially halted major infrastructure projects from that sunsetting period until such time as we have a new, reliable source of funding in place.

There's a three-year window there where no major infrastructure projects will be undertaken because there is no reliable or sustainable source of funding.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

If you could provide that for us, that would be great.

You testified to this, but I also noted in your submission that, in Montreal, its estimated funding need is approximately $550 million annually. In Toronto, the Toronto Transit Commission has unfunded needs estimated at $900 million annually. I believe you repeated those figures here.

What is the total estimated annual state of good repair funding needed for all transit systems across Canada? Can you give us a ballpark idea?

[Kelly Paleczny]

I don't have that number off the top of my head, but that is something we could provide.

[Don Davies, NDP, Vancouver Kingsway, BC]

Just looking at those two numbers, between two of Canada's major cities, it's about $1.4 billion.

Would I be correct in estimating that it's in the billions of dollars?

[Kelly Paleczny]

Absolutely, yes. It is significant.

[Don Davies, NDP, Vancouver Kingsway, BC]

You also called on the federal government to include an annual funding escalator tied to the cost of construction to ensure that the Canada public transit fund maintains its value over time.

Could you quantify what impact the failure to attach an annual funding escalator will have on the value of that over time?

[Kelly Paleczny]

Certainly, we've seen that, in the previous program that sunsetted, the inflationary impacts we saw over the pandemic period on a number of those infrastructure projects resulted in the inability to complete those projects, because the funding isn't there to make up the difference with respect to the inflationary factors.

What we're hoping for here is to see an annual inflation escalator applied so that we can keep up with those costs and not find ourselves in a similar situation.

[Don Davies, NDP, Vancouver Kingsway, BC]

I know that in British Columbia and Saskatchewan, the transit authorities, the latter of which I met with a few weeks ago, both identified serious crises in maintaining present service, never mind expanding for the future.

My final question to you is this: Is there a multiplier effect? For instance, for every dollar that we publicly invest in public transit, is there an estimated return to the Canadian economy as a whole?

[Kelly Paleczny]

The number quoted in our presentation is that slightly over two dollars is returned to the economy.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

To the Green Budget Coalition, in your pre-budget submission, you suggested that Canada be put on a path towards delivering on our commitment to protect at least 30% of land and ocean.

Can you confirm how close Canada is currently to achieving that goal?

[Will Bulmer]

I can't speak to the current numbers, but most recently I have been told that for marine we are on track towards 30%, and if not, then close to it. Terrestrially, I believe we are just under 14% protection right now.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thanks.

You commented on a multiplier. You said every dollar spent by Parks Canada resulted in a $4.20 contribution to Canada's GDP.

Can you explain that multiplier and anything else in terms of federal government investment in our environment?

[Will Bulmer]

Absolutely.

Those are Parks Canada's numbers, actually. I believe they estimated it was $4.20 for every dollar invested.

What we're recognizing is what's called a “conservation economy”. In conservation efforts, there are jobs created. There are tourism opportunities that are built, particularly for rural and remote communities and indigenous communities.

For instance, WWF just finished a report in the Arctic in the community of Taloyoak that is significantly higher than a 4:1 return. It is very contextual, but in general, we're recognizing that a dollar invested in conservation is paying dividends well beyond the upfront cost.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay. Thank you, Mr. Chair.

In your pre-budget submission you called on the federal government to provide $12.4 billion over five years to support building retrofits. Can you explain the benefits of that investment?

[Jessica McIlroy, Manager, Buildings, Pembina Institute, Green Budget Coalition]

Thank you very much for the question.

That is, obviously, a very significant figure, and it speaks to the significant need in our existing housing structure. We estimate that approximately 80% of our current housing will be in place by 2050. If we're thinking of it from a climate mitigation aspect, those are buildings that need to be retrofitted and have emissions reductions associated with them, but primarily it's an investment in what is becoming critical infrastructure for the well-being of Canadians.

We're losing an incredible amount of funding and homes due to climate change now. We have increasing costs related to that infrastructure loss to health care. We often point to the experience of the heat dome in British Columbia, where over 600 lives were lost due to that over a two- to three-day period. There are significant costs now associated with climate change and the impacts to that infrastructure. It really is an investment in improving and trying to bring up to the required level housing for those who are most vulnerable, who are currently living in poor-quality housing and struggling to acquire the capital they need to make those improvements themselves.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

Members and witnesses, we're moving into our second round of questions.

We're starting with MP Morantz for five minutes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Professor Lee, I'm in the unfortunate position of having had my colleague, Mr. Kelly, ask every excellent question I would have ever asked. I'm going to retread some of that ground with you, but maybe from a slightly different angle.

I want to go back to the comments of the senior deputy governor of the Bank of Canada, which were made on March 26 of this year.

In her speech, she said:

Productivity is a way to inoculate the economy against inflation. An economy with low productivity can grow only so quickly before inflation sets in. But an economy with strong productivity can have faster growth, more jobs and higher wages with less risk of inflation. ...You've seen those signs that say, “In emergency, break glass.” Well, it's time to break the glass.

Those are very serious comments from a high-ranking official at the Bank of Canada.

On April 16, the government tabled budget 2024. That was only 20 days later. In that budget, they increased the capital gains inclusion rate from 50% to 66 and two-thirds per cent. You commented earlier that, based on the peer review reading you've done, that won't help the situation.

I can't understand why a government would take a policy measure that would have the exact opposite effect of the advice received from a very high-ranking official at the Bank of Canada. Can you square that circle for me?