Finance Committee on Dec. 7th, 2021

[Heath MacDonald, Liberal, Malpeque, PE]

Has an analysis been done? If Bill C-2 doesn't go through, what negative effect will it have on our economy?

[The Chair, Liberal, Peter Fonseca]

You have only 15 seconds. We're going to have to move, Mr. MacDonald. Thank you.

We're moving to the Bloc, Mr. Ste-Marie, for two and a half minutes.

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

Thank you, Mr. Chair.

My colleague Sophie Chatel mentioned the cultural sector, which is included in the tourism and hospitality recovery program. Mr. Poirier confirmed this, and we are very happy with that inclusion.

We, in the Bloc Québécois, are very concerned about self‑employed workers in the cultural sector. In fact, a few years ago, the model for independent and freelance workers in the cultural sector in Quebec took the form of self‑employed workers. What is understood from Bill C‑2 is that self‑employed workers in the cultural sector currently find themselves without a support program, as there is no longer the Canada emergency response benefit, or CERB, or the Canada recovery benefit, or CRB.

Could Mr. Poirier or Mr. Baylor confirm this for me?

Thank you.

[Yves Poirier]

Thank you for the question.

I would like to echo a comment made earlier by my colleague Mr. McGowan.

The wage and subsidies apply to wages and rents. To be eligible for these programs, you had to have and will have to have eligible expenses, such as wages or rent.

So self‑employed workers would not be eligible for the wage subsidy, since they do not pay any wages. They might be eligible for the rent subsidy if they have to pay rent. However, the basis of these subsidies does not change.

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

Thank you for the clarifications.

A freelance worker in the cultural sector does not have eligible expenses for rent. So a program will be needed to support self‑employed workers. Bill C‑2 contains no measures for these people, yet this is a sufficiently important sector for us to say to ourselves, as a society, that we cannot afford to lose this expertise.

I will come back to this later, because my time is up.

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we will move to the NDP, Mr. Blaikie, for two and a half minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

One category of business that I've heard from, which I will just take as an example, is New Flyer Industries in my riding, which is a bus manufacturer. They have struggled in the pandemic. Obviously ordering new buses wasn't top of mind for cash-strapped municipalities.

They are optimistic about their future, but the way the ongoing support is structured for the hardest-hit business programs doesn't take into account the way a business like theirs receives their revenues. They may have very little revenue for months at a time, and then they deliver an order and get paid in one month for maybe several buses. They have a revenue spike, and then the following month they are back to working on some of what's left of their remaining pre-pandemic orders, and they may not be paid again for some time.

I'm just wondering if the department contemplated businesses that operate on this kind of model and what recommendations they have for them.

Is there anything in Bill C-2 that would provide assistance to these businesses, or are they out of luck because of the nature of their revenue cycle?

[Trevor McGowan]

The calculations of revenue in Bill C-2 are based on the existing rules for the wage and rent subsidies that are found in the act and that have been relied upon by businesses since the inception of those programs.

I can say that there has been some thought given to providing additional flexibility—and this was evident from the start of the program—for businesses in terms of determining their revenue calculations. For example, there is an option to elect a cash-basis revenue calculation, which would be, I suppose, the opposite of what would be hoped for here, whereby you look to cash revenues to determine what revenues fall in what months, but the basic rule is to rely upon revenues for accounting purposes, which is more typically done on an accrual basis.

The revenue rules that are in Bill C-2 are based on the existing ones.

I would mention that, for some of the programs that look to year-over-year or prior-year revenues, those are based on revenues over a 12-month period, which would hopefully smooth out some of those timing issues. In addition, as we discussed earlier, there is the deeming rule that could apply, which would allow for an entity to pick the higher revenue decline for the current period or the prior period.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. McGowan.

We're moving to the Conservatives for five minutes.

Mr. McLean, go ahead, please.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

I'll go further on some of the questions we didn't get to last time.

One of the issues, of course, is the regulatory extension from May to July that you talked about for all or part—I'm not sure—of the three different parts of this bill. I'd like you to comment on that and on whether you see them going hand in hand or if you can extend just parts of them. Under what circumstances would you see these extensions to July being necessary?

Please comment on how you pushed July as being the month that you're going to push it to.

[Trevor McGowan]

I can speak to the deadline for part 1 of the bill, and then I'll turn it over to my colleague for part 2. There is the flexibility to add two more qualifying periods, which, as was mentioned, could go up to July 2, 2022.

With each bill and iteration of the wage subsidies, there has been an extension of how far out it could be applied. They have never made them indeterminate or without end, but they have provided enough flexibility to get through the next few months. I'm sure that if [Technical difficulty—Editor] they would have [Technical difficulty—Editor]. I remember the hope was—

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

The issue, of course, we're looking at is the accountability for the outcome and decision-making here.

If there's just an obvious extension, how do we hold the government accountable for that extension when it means more money going out the door, more on top of the $7 billion you're already planning to spend?

[Trevor McGowan]

I'm not sure I can speak to the political process of holding accountability, but I would note rather that the time limit of July 2—and these limits have been around for as long as these measures have—is intended to ensure that, for any extensions beyond the set horizon, the government would have to come back to Parliament.

[Greg McLean, Conservative, Calgary Centre, AB]

The government would have to come back to Parliament if it ended in May, but now it wouldn't have to come back to Parliament if you extended it past the $7 billion. Say it's $10 billion by July, but there's no accountability for that built into this bill. Is that correct?

[Trevor McGowan]

The government would need to come back to Parliament in order to extend it past July 2, 2022.

[Greg McLean, Conservative, Calgary Centre, AB]

Yes, that was my question. The $7 billion would be for the May time period, and then probably more, I would presume, would be required if we extended it to July. Am I wrong?

[Trevor McGowan]

I'm not sure about the costing, but my colleague Max can speak to that.

[Maximilian Baylor]

That's correct. The costing is up until the May 7 date. Then, in terms of the policy rationale behind the extension, I would simply echo some of the comments of my colleague.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay, to finalize on that then, we're talking about a $7-billion program here until May, but extending it to July would cost us just, pro rata, probably $9 billion total? Is that what we're authorizing here?

[Maximilian Baylor]

I can't answer that at this stage. It would depend on the parameters of the program at that point.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay. Thank you.

I'll go back to Ms. Demers on the $5,000. There are all kinds of reports of this program being abused by corporate entities and income-splitting entities that are backdating who was being paid in their organization and even in their families. In Calgary I have quite frequently heard that a lot of organizations took advantage of these programs along the way to add family members to the financial statements of their companies in order to get more money into their pockets.

Would you commit to actually looking at this investigation and seeing where it leads? This does seem to be a rather deep problem in the delivery of these programs.

[Catherine Demers]

Thank you for the question.

This is a question that perhaps the Canada Revenue Agency may be able to help us with, sir. I could take it back, but I'm not familiar with the details of these cases.

As I've mentioned before, we have some strong measures, integrity measures, that have been added to ensure there is verification prior to issuing the payment of the benefit. These measures were put in place last year for the Canada recovery benefit and are now part of the proposed bill for the lockdown benefit. They're very important because they allow us, before payment, to ensure that the information related to income is accurate.

[The Chair, Liberal, Peter Fonseca]

We have one last questioner from the Liberals, Ms. Dzerowicz. This is going to conclude our third round and also our session here for our second meeting of the standing committee.

Ms. Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

How many minutes do I have, Mr. Chair?

[The Chair, Liberal, Peter Fonseca]

You have about four minutes.