Finance Committee on May 17th, 2022

[Corinne Pohlmann]

That would be a general ask from the CFIB, only because we saw that EI rates are going to be slated to go up in January after three years, and we believe we need to think about something that we can do, given that CPP rates are also going to be increasing at that point in time. We're more generally asking the government to consider some policies that may help offset some of those increased costs that are coming.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Albas.

Now we'll have questions from the Liberals. MP MacDonald, you have six minutes.

[Heath MacDonald, Liberal, Malpeque, PE]

This question will go to Ms. Pohlmann from the CFIB. I was a former minister in Prince Edward Island and received your Golden Scissors Award. I appreciated it at the time. It's still in my office.

What I wanted to talk to you about is.... I was reviewing your website. At what point do you think it's relevant.... Based on everything that's happening in the country and your concerns regarding the budget, would you start to retract the benefits to small businesses?

I know you're in advocacy, but at some point, looking at the broader strokes, I'm wondering, when do you decide to continue pursuing additional benefits for small businesses?

[Corinne Pohlmann]

I suspect you're talking about the COVID benefits. Is that correct?

[Heath MacDonald, Liberal, Malpeque, PE]

That's correct.

[Corinne Pohlmann]

We're not opposed to those benefits now ending. We know they ended about a week and a half ago. The piece that we're still very concerned about, however, is the amount of debt that is still being held by small businesses across the country. It's pandemic-related debt, I should say. It was all accumulated in the pandemic through no fault of their own, for the most part, so what are we going to do to help them deal with that debt?

We're already seeing bankruptcy statistics starting to go up. We had a release yesterday from Statistics Canada that showed bankruptcies are starting to increase. They're back to what they were before the pandemic, if not higher. This is only going to continue, and if we want to stop some of the haemorrhaging, we're going to have to think about ways to help those small businesses deal with their debt.

We're not pushing for an extension of the wage subsidy or the rent subsidies anymore. We know that they have to come to an end. Many of our members are open to their ending now, but we still have to deal with the fact that there are businesses struggling with the debt. That's where we'd like to see consideration around things like increasing a forgivable portion of the CEBA loan a bit more, and maybe adding a forgivable portion to the HASCAP. Maybe it's just for those hardest-hit sectors that were shut down for more than x number of days, 300 or 400 days during the pandemic.

There still has to be some recognition that this isn't over for a lot of small businesses.

[Heath MacDonald, Liberal, Malpeque, PE]

The service sector is what you're talking about, to some extent.

[Corinne Pohlmann]

Correct.

[Heath MacDonald, Liberal, Malpeque, PE]

The federal government covered approximately 92%, if not more in some provinces, of the cost to COVID recovery. Overall, more money was spent on small businesses—approximately $176 billion to $200 billion—compared to individuals. There was some money left on the table by provinces, including my own province and New Brunswick.

What advocacy are you doing within the provincial governments to ask for support relevant to some of the issues that you're having right now?

[Corinne Pohlmann]

We have been advocating strongly at the provincial level to do more. We feel the provinces didn't step up for the very reasons you just talked about. They had money that was given to them and provided to help with COVID-related issues.

We have been actively pursuing provinces over the course of the last couple of years and as recently as a few months ago to suggest to them that as the level of government that made the decisions of when businesses had to be restricted or not, they had a responsibility as well to help those businesses through that. We will continue to try to do that and tell them about the debt loads that our members are facing, as well as the cost increases that they're facing, and encourage them to do their part.

[Heath MacDonald, Liberal, Malpeque, PE]

How many small businesses do you represent? Is it around 100,000? Is that what you said at the beginning?

[Corinne Pohlmann]

Yes. We were at 110,000 prepandemic. It went down to 95,000 during the pandemic. We're hoping to rebuild.

[Heath MacDonald, Liberal, Malpeque, PE]

I know insolvencies at year's end in 2020 decreased from 2019, which was ironic. You're saying now that they're going back up to prepandemic levels, to where they were in 2019.

[Corinne Pohlmann]

Apparently it's even higher. I think we're at the beginning of that cliff we talked about. Now that the supports are gone and debt is high, I suspect we're going to start seeing more and more closures over the course of the next few months.

[The Chair, Liberal, Peter Fonseca]

You have 90 seconds.

[Heath MacDonald, Liberal, Malpeque, PE]

There was something else on your website. You had concerns with the deficit and debt relevant to the government.

[Corinne Pohlmann]

That's right.

[Heath MacDonald, Liberal, Malpeque, PE]

It's interesting that we're talking about providing more supports, but you're talking about concerns about the debt. Can you give me an overview of your thoughts on that?

[Corinne Pohlmann]

Sure.

Essentially what we're looking for is a plan. We not suggesting that the deficit needs to be eliminated immediately. We know that's not realistic, given everything that's happened, but to have more of a plan that looks at how we're going to actually eliminate the deficit over time and start bringing down the debt—that's what we're looking for. It's more of a plan that we would like to see the government put into place.

[Heath MacDonald, Liberal, Malpeque, PE]

I guess what I was referring to is asking for more money but being concerned with the debt. I guess it's kind of a “having your cake and eating it too” type of thing. I'm not trying to be facetious, but I think when I read your website, that stands out.

[Corinne Pohlmann]

But where does the money come from? It comes from the economy, but in order for the economy to continue to thrive, we have to make certain investments to make sure people can continue to build up the economy to where it needs to be. Small businesses are an absolutely integral part of our overall economy in Canada, representing 50% of GDP. We're not going to save all of them, and we get that, but it's through no fault of their own that many of them are in the position that they're in.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP MacDonald.

Now we'll hear from the Bloc Québécois with MP Ste-Marie.

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

Thank you, Mr. Chair.

I'd like to welcome all the witnesses and thank them for being here and for their presentations.

My first questions will be for Mr. Blackburn from the Quebec Employers Council.

I agree entirely on all the points in your presentation. We have a major concern about this bill and the luxury items tax. The officials told us that no assessment of the financial repercussions of this tax had been done.

We are not opposed to the principle; we support it. However, we are increasingly realizing that applying this tax may have numerous harmful effects on the shipbuilding industry, for example. This tax will also have major repercussions for the aerospace sector.

The Paliamentary Secretary to the Deputy Prime Minister and Minister of Finance, Mr. Beech, sits on our committee and is well aware of this subject. He knows the problems this tax may cause for the aerospace sector. However, that seems to be less apparent for the Ministre of Finance and her officials.

The officials were made aware of the problem of levying the tax on aircraft destined for export from the work done by the committee. The tax levied may amount to a half billion dollars in cash flow per year. The officials tell us that since the tax will be implemented in a few months, we can pass the bill in its present form and a solution will be found sooner or later.

How do you react to that? Ms. Kozhaya, you recently spoke with my colleague Alain Therrien about this.

The officials told us that the 90 per cent threshold would depend on the Canada Revenue Agency's interpretation. We don't really know what that means, and we are only being presented with fuzzy information. It seems that the government has given no instructions for the problem to be solved.

Can you remind us of the importance of dealing with these two problems in the bill?