Finance Committee on May 17th, 2022

[Jacques Demers]

We represent the regions, and I can say that the situation is less common in rural communities. You are absolutely right, but it's more of an issue in big cities.

When companies look for buildings to buy up in order to transform the units into condominiums, and then raise prices, it has a harmful impact on a segment of the population, making it impossible for them to find affordable housing.

For zoning and land-use planning—I'm not making a specific request to the federal government on this point, because municipal governments also have an enormous role to play—couldn't certain criteria be added, to find a way of setting aside a percentage of housing for these people when we know that developers only want to sell at high prices.

Given his familiarity with taxation matters, Mr. Boulet could perhaps tell us more about that.

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

I'd like to ask you another question.

Do you feel that people involved in rental services, like Airbnb, are exerting pressure on the housing market in rural areas?

[Jacques Demers]

I love your question, because I am one of those people who, in Quebec, went to battle over this. Airbnb is frequently active in our communities, and in particular at our vacation destinations. So people are buying big houses not to live there, but to rent them out. That raises the issue of zoning, and they make changes in places to which people moved in order to live there. Overnight, business pop up. We can't allow that to happen. We can't have international companies showing up and deciding how our communities are to be zoned.

When we, the municipal governments, want to change something or allow multi-tenancy rather than residential accommodation, we have to consult our citizens. That should also apply to businesses. A referendum could be held and various measures implemented. When these international companies move in, we get the impression that they simply ignore municipal regulations and the people who live there. We can't let that happen.

I'm not saying that there's no place for short-term rentals. There's room for projects like that. However, the areas for that purpose need to be established. We can't just allow them to take over and choose where they want to set up shop. It has to be predetermined, hence the importance of land-use planning.

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

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Demers.

Thank you, MP Blaikie. Now we go to the Conservatives.

Welcome to our committee, MP Arnold. You have five minutes for questions.

[Mel Arnold, North Okanagan—Shuswap, CPC]

Thank you, Mr. Chair. It's a pleasure to be here at the finance committee as a substitute. It's good timing, since the Boating BC Association is here. It's an important issue in my riding of North Okanagan—Shuswap.

Through you, Mr. Chair, I'll be directing questions to Mr. Hayne.

Mr. Hayne, in the past we've seen governments in other jurisdictions implement surtaxes like the one being proposed by the Trudeau government. Hundreds of small businesses in both rural and coastal communities rely on income from houseboat charters, boat rentals, boater training and fishing charters.

I understand that aircraft with qualifying flights conducted in the course of business for profit are exempted from the proposed new surtax, but boat charters and rentals are not. If no exemption is granted for vessels, what impacts do you foresee for Canadian employers operating boat charters and rentals?

[Bruce Hayne]

Thanks for that. Through the chair, MP Arnold, it's going to have a devastating impact on boat rentals.

In the interior of B.C.—in your area, in the Shuswap area, for example—there are many houseboat charters that have a very limited season to work with. They have to buy new vessels on a regular basis, every couple of years. Adding 10% to the price of a houseboat, for example, specifically to rent it out—not for personal use but only absolutely for rental use—is going to have a devastating impact on this industry.

It's already been hurt over the past couple of years with COVID restrictions and travel restrictions. Many of the guests who come to the B.C. interior, for example, are from Alberta. Those travel and hospitality sectors have been cut off for the last couple of years. The houseboat rental sector, fishing charters and so on have been hurt tremendously in the past couple of years. They're just trying to hang on and survive. Adding 10% more to the price of a vessel as a business expense is going to really cripple them.

[Mel Arnold]

Thank you. Have Canadian boat manufacturers and retailers experienced impacts of the proposed new surtax even though it has not yet been passed or implemented?

[Bruce Hayne]

Yes, they have. I was just at a boat show in Sidney, B.C., over the weekend. It was the talk on the dock, if you will, that many potential buyers are very hesitant, because, first of all, there are delays, of course, in delivery of vessels—up to two years in some cases, or more—and prices continue to go up because of supply, and then adding a 10% tax to that is really putting a damper on the market. Neptunus Yachts, for example, in Kitchener, Ontario, sells most of their vessels in Canada. They have several pending deals that they've written over the past couple of months with a clause that the purchasers have put in that if the tax comes into effect, the contract will be null and void, so they are now looking—

[Mel Arnold]

Thank you. I'll move on, if I can, to further questions.

[Bruce Hayne]

Thank you, sir.

[Mel Arnold]

Do you expect that consumers will make the decision to purchase or invest in charter vessels in the U.S. rather than Canada because of this surtax?

[Bruce Hayne]

Yes, absolutely they will. In the case of British Columbia, that money is very transferable. People who can buy vessels will do so in Seattle or in Blaine, or elsewhere south of the border. They'll register their vessels south of the border, and that tax will simply not come into the Canadian government's coffers and those opportunities will not come to Canadian retailers.

[Mel Arnold]

Do you expect people who would rent a houseboat or charter a vessel will end up going outside Canada to rent, because of the impacts of this surtax?

[Bruce Hayne]

Certainly the tax is going to be passed on to consumers, so there's simply no way to avoid that extra 10% not being passed on to consumers, and that's going to make us less competitive with our American counterparts, yes.

[Mel Arnold]

Has your organization been provided with any explanation on why the surtax would be applied to the gross rather than the net amount, like HST and GST are?

[Bruce Hayne]

Through the chair, we have not. We pointed that out to the ministry of finance; we've had no specific explanation as to why there's going to be a change now to have a tax on tax.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Arnold.

Moving to the Liberals, I believe we have another substitute. Welcome, MP McDonald—not “MacDonald”. We have a MacDonald here on the committee too, who is a permanent member.

We have MP McDonald for five minutes.

[Ken McDonald, Liberal, Avalon, NL]

Thank you, Chair. I won't try to explain why the difference in the “Mac” and “Mc”, but there is an explanation for it.

[The Chair, Liberal, Peter Fonseca]

You have five minutes.

[Ken McDonald, Liberal, Avalon, NL]

I'm glad to be back at this committee again as a sub.

My first questions will be to Ms. Sarangi.

You mentioned child poverty and ways to end it, and how beneficial to Canada the child benefit was. I will say that my first time coming to Ottawa was when I was first elected in 2015. I think the biggest eye-opener for me when I walked back and forth to the Hill, to my office or to the House of Commons, was seeing the homeless people. I grew up in, and still live in, a community where I don't know of anyone who's homeless. I hear tell that some people are couch surfing, but I don't see anyone on the street panhandling or literally homeless and sleeping on the streets. It was quite an eye-opener.

For you, what would be the one thing we could do as a government that would guarantee an end to child poverty?

[Leila Sarangi]

Through the chair, thank you for that question.

There is no silver bullet and there is no one thing, but the Canada child benefit does make a substantial difference in the rates of child poverty.

I will quickly remind the committee that the first promise was made in 1989 to end child poverty by the year 2000, which is where Campaign 2000 gets its name from, and 30 years later, we still have more than 1.3 million children living in poverty. Once the Canada child benefit was implemented in 2015, we did see that rate significantly decrease. Our research is showing that it is plateauing and that the Canada child benefit is losing its power. Indexing it to inflation keeps the current effects at the same level. We need a significant increase of investment into that base amount. That will make a huge difference.

I did mention earlier tying transfers that go to provinces and territories to adequacy standards. If we can do that and make sure that social and disability assistance programs are advancing our human rights obligations, that is also going to make a substantial difference in child poverty and take us towards ending it for good.

[Ken McDonald, Liberal, Avalon, NL]

Thank you for that.

You also spoke about the repayment or collection of overpayments from individuals, regardless of their economic situation. With regard to full amnesty for people who can't afford to pay it back, I tend to agree with that statement. I know Mr. Blaikie mentioned it as well. Also mentioned was how much money is in the budget to try to collect that money back—some $260 million, I think, is what he mentioned.

In my opinion, the government would spend more trying to collect the money back than what they would actually get back. It's a negative thing to do. You're spending more to collect. You're spending $10 to get back $5. It doesn't benefit anyone. I think it's probably something that should be looked at, doing exactly what you're asking. Mr. Lawrence referred to “blood from a stone”; in Newfoundland we say, “You can't get blood from a turnip” if somebody can't pay a bill. Sometimes it's just better to take the loss, walk away and be satisfied with that.

I don't know whether you want to comment on the full amnesty thing before my time runs out. If so, I'd appreciate it.

[Leila Sarangi]

Thank you very much for your support on the ask for full CERB amnesty.

I agree. You cannot get blood from a stone or any kind of root vegetable. MP Blaikie mentioned the letters. It cost the government almost a million dollars to put postage stamps on those letters to send them out, and it didn't result in one dollar back in government coffers. The government spent billions of dollars that were much needed, and they're not going to generate any kind of revenue this way. At this point, I think we have to cut the losses, move on and deal with some of the bigger revenue-generating streams, like real fraud. There are mechanisms for dealing with that.

Thank you very much for your support. I'm very pleased to hear it.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Sarangi and MP McDonald.

Now, members, we're moving to our third round. In this round, we have the Conservatives up first, with MP Chambers.

Oh, there's the five-minute bell.