Finance Committee on May 17th, 2022

[Karl Blackburn]

I'm going to answer your question first.

The labour shortage is certainly at the top of our members' priorities. We have spoken about it briefly, but the labour shortage has major economic consequences. Some people argue that it's good news. But we are facing a serious economic crisis and that has serious economic repercussions for Canadian businesses.

One member out of two told us that they have had to turn down contracts because they lacked the workforce needed in order to perform them. Forty-three per cent of our members told us that they have had to postpone or cancel investment projects because they didn't have the workforce to carry them out.

In the short term, the government of Canada could have adopted incentives to enable experienced workers to stay in the labour market or return to it for two or three days a week, because a lot of people want to do that.

As one such measure, the government could raise the level of earnings where there is no tax payable and allow businesses that hire experienced workers not to have to pay into the pension plan or employment insurance program. Those are very concrete measures that would have quickly made it possible for hundreds of thousands of workers at all businesses in Canada to return to the labour market.

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

I certainly agree.

Mr. Guénette, you can take your turn to speak.

[Jasmin Guénette]

These are the four priorities we have defined.

First, operating costs have to be reduced. As you said, there are the costs of energy and inputs, among other things.

Second, there are operating costs associated with the various taxes and other charges imposed by governments. This is an issue that has to be resolved.

Third, the problems associated with supply have to be solved so we can get goods and products on time.

Fourth, we have to find solutions to the labour shortage, which is significant.

So that, in a way, is the four big priorities we have defined to date. This isn't an easy situation for heads of companies, both in Quebec and everywhere in Canada, who have to deal with these issues.

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

Thank you both.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Now we go to the NDP and MP Blaikie for two and a half minutes.

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

Regarding the labour shortage, I wonder to what extent workers' access to housing and access to child care services, for example, are part of the problem that has to be solved to ensure that our businesses have access to sufficient numbers of workers.

[Jasmin Guénette]

Do you want me to answer the question?

Who are you asking?

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

Mr. Guénette and Mr. Blackburn can both answer my question.

We can start with you, Mr. Guénette.

[Jasmin Guénette]

I'm going to repeat some things that have already been said.

A number of our recommendations are important for dealing with the labour shortage in Canada. We have already discussed it, but immigration is an important issue. We have to make sure that our businesses have access to more foreign workers, faster.

Better on-the-job training also has to be offered, because that would make it possible to keep existing employees longer. So solutions have to be found to improve the on-the-job training system, in particular by reducing employment insurance premiums.

Automation is another solution that has to be promoted. My colleague mentioned it earlier: some businesses want to promote automation.

Another solution would be to offer financial assistance for payroll taxes, which would give businesses more resources to hire staff, perhaps even to raise wages. This would put more money in entrepreneurs' pockets for finding the staff they need.

Incentives have to be put in place to encourage people to return to the labour market while giving them access to housing near their place of work. That is certainly another solution that could help to solve the labour shortage.

Announcements have been made about this. We will have to see, in detail, how it is going to look, but all these recommendations can certainly be part of the solution.

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

Thank you.

Mr. Blackburn, do you want a turn to add a comment?

[Karl Blackburn]

There are certainly two places where the federal government can act quickly to combat that shortage.

First, through the employment insurance program, which is currently being reviewed, we could create a continuing education program. People who have lost their job could get training and continue their education, and businesses that provide training could get tax incentives, which would encourage them to do more.

On the housing crisis or the infrastructure situation, it's a red herring in connection with the labour shortage, if I may put it that way, because everyone is affected by that situation.

If we want to have more services, have more childcare spaces, and have infrastructure that is worthy of the name, in all regions of Canada, we first have to be able to alleviate the labour shortage. Without vigorous measures that are necessary for our economy, unfortunately, we are going to suffer the consequences of this labour shortage.

I come back to the statistics I spoke briefly about before. There are investments not being made and contracts not being performed because we don't have the necessary workforce. So this is a problem.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blackburn.

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

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

Now we'll move to the Conservatives and MP Stewart for five minutes.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Mr. Chair.

Again my questions are for the CFIB.

A media release on your website says, “April 1 saw an increase in carbon taxes, adding further unfairness to a tax regime that collects hundreds of millions from small businesses while returning next to nothing to them in rebates. Fuel and energy costs were viewed as the single biggest cost challenge facing small business and a process to return these desperately needed dollars to small businesses has yet to be created.”

I see a quote here from Mr. Kelly, who said, “CFIB will continue to lobby for a rebate program available to all small firms paying federal carbon taxes.”

Given that fuel and energy costs are huge cost challenges to Canadian small businesses, do you feel that it's time for the government to suspend the carbon taxes it's imposed on Canadian small businesses to offer relief, or at the very least offer an emergency rebate program to small firms being punished by the carbon tax? Please feel free to share your ideas on this matter.

Thank you.

[Corinne Pohlmann]

I'll take that first. Jasmin, you may want to add something afterwards.

Carbon taxes for small businesses, as Jasmin pointed out earlier, have been very unfair at the federal government level. As we've talked about, half of those revenues come from small businesses. A little bit of that is from what they call the “MUSH” sector—municipalities, universities, schools and hospitals. That's about 8% of that 50%. They are only supposed to get back only about 8% to 10%. However, that's never really been returned to small businesses. It's still sitting, as far as I understand, according to the Parliamentary Budget Officer, with government. It's been accumulating over the course of the last few years as the carbon tax has been collected.

Initially, that money was supposed to go into programs to help small businesses become more energy-efficient. However, only one program was ever introduced, and that was prior to the pandemic. The threshold to actually access the program required you to invest $80,000 to get any money back. Most small businesses don't have $80,000 to invest in energy-efficient equipment. We had been told that they were going to create a second program that would have a much lower threshold to allow access from smaller businesses. That never happened. COVID hit. Since then, there has been nothing available to small companies.

What needs to be done first and foremost with the federal carbon tax is to make it more fair for smaller companies. If they're investing 50% into the carbon tax, they need to get back at least that same amount.

Most of that money, as we know, is going to consumers in the form of a rebate. However, for small companies, the amounts that have accumulated, which are supposed to go back to them, are still sitting with government. That is the major crux of the problem for us.

Of course, the fact that it's going up every year is another cost issue. Many of them are going to have to figure out a way to absorb that increase. We had called for them to freeze the carbon tax this year, if for no other reason than to just allow them an opportunity to breathe before they had to figure out how they were going to absorb these costs into their particular companies. Of course, that didn't happen.

That's essentially where we'd like to see the carbon tax go in the future. It's to figure out a way to make it fairer for smaller companies and potentially to freeze it if we're still in the situation of struggling with debt and other costs.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Ms. Pohlmann. I appreciate your response.

In my constituency in New Brunswick, some small businesses are really struggling with the carbon tax. The interesting thing about the carbon tax is that carbon emissions actually went up. Not a single climate change or crisis or whatever it's called on whatever day.... It's a different name each day. Nothing has actually transpired that would lead Canadians to believe it's working. Businesses are paying more. People are paying more at the pump. Everybody is paying more and everybody is hurting because of massive inflation during this pandemic. Now, of course, the government is blaming everything on a war that started about a month ago.

I appreciate your being here today. To reiterate and just to wrap up, you agree that the carbon tax is hurting small businesses in Canada and basically they're getting nothing in return. You've called for a rebate. There are other ideas out there, but that one, at least, would serve for the time being.

Can you elaborate at all on how much the added costs are to small businesses? Is there a percentage or a number that you can work with on that?

[Corinne Pohlmann]

It's hard to say, because it would depend on the sector you're in. Certain sectors are much more energy intensive, and therefore the impacts are much greater.

Jasmin, maybe you could speak a bit to the agriculture side and some of the impacts there. That's probably more where we have some anecdotal information. Jasmin, do you want to share—

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

I appreciate it. Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Stewart.

Now we have MP MacDonald for the Liberals for five minutes.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

I just want to go back. Ms. Pohlmann, you talked a little bit about innovation and the commercialization fund. We've often heard in here that we don't commercialize quickly enough, and when we do commercialize, the innovations don't necessarily stay within Canada, so I'm wondering if you could provide us with any insight or advice on further policies to help in that regard.

[Corinne Pohlmann]

I don't know if I was the one who said that. I think that was Norma. Perhaps you'd want to turn to her, because I'm not very familiar with that fund.

[Heath MacDonald, Liberal, Malpeque, PE]

Sure, if Norma is there....

[Norma Kozhaya]

Yes. Thank you.

Yes, I think it was me who had addressed that question, which is very important.

It's a problem because we don't commercialize our innovations in Canada. So we don't get all the benefits of our innovations. We hope that the innovation and investment agency will play a crucial role in this regard. The agency could support inventors and innovators, whether by creating tax incentives or by providing them with the necessary information for retaining intellectual property.

The budget also provides for a review of the research and development credits program. Those tax credits can be adapted to encourage more spending on commercialization. At present, the credits apply to the scientific research and experimental development program. However, many of our members tell us that spending on commercialization and market studies in connection with scientific research doesn't apply. The same is true for certain research done by subcontractors.

We also hope that the review of these credits will be an opportunity to provide better support for commercializing innovation.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

The other day we heard that universities received about $10 billion. There was a discussion around commercialization and R and D within the universities. I just wanted to get your opinion on that funding, on what the universities do relative to research and then, on top of that, on the commercialization, which you just answered. How does that play out? Should that continue in that process, or is there a better way to do it?