Finance Committee on May 17th, 2022

[Norma Kozhaya]

That is certainly good news. Clearly, tax relief for businesses is welcome. It will also encourage them to grow, because sometimes going from being a small business to being a big business comes with tax and regulatory repercussions that can be onerous. I don't have any precise figures, but plainly it is a welcome measure.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Right, thank you.

This budget creates the Canada growth fund, which will have a lever effect on private capital, with the aim of increasing Canada's economic productivity.

What is your organization's opinion about the Canada growth fund?

[Norma Kozhaya]

As I said, the Canada growth fund falls within the broad outline of what we had asked for, for there to be some sort of matching between public and private funds. Obviously, at this stage, it's a bit difficult to tell you more. We are in the process of consulting our members, because we don't have a lot of details, either about that fund or about the innovation agency, but the details should come out later in the fall. Experts are currently being consulted.

Certainly there has to be flexibility and openness to all businesses. When we talk about the green transition, all businesses can contribute to reducing their carbon footprint. So I believe they can all be given guidance and support and perhaps even benefit from this fund.

We also have to see how this fund is going to fit in with the other measures that already exist, whether with the ministère de l'Économie et de l'Innovation or the ministère des Finances in Quebec. This fund is a worthwhile addition. As I said earlier, we would also like to look elsewhere to see, in concrete terms, what would be more effective, but plainly it's one more welcome tool.

According to the OECD, the Organization for Economic Cooperation and Development, Canada's prospects for economic growth for the next decade are not among the best. So if this tool makes it possible to reverse the trend, that is, to improve our productivity, which is an issue at present, it is plainly a very much appreciated tool.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you.

I'd like to switch to the Canadian Federation of Independent Business.

Mr. Chair, how much time do I have? Is it about 90 seconds?

[The Chair, Liberal, Peter Fonseca]

That's correct. You have about 90 seconds.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

We announced changes to the temporary foreign worker program to support small businesses, particularly those with a higher unemployment rate. I'm wondering if you could comment on what this will mean for your members.

[Corinne Pohlmann]

The most recent changes to the temporary foreign worker program are very welcome for our members. When we asked our members how many have used the temporary foreign worker program, it was only about 16%. However, those who used it found it to be super-helpful in dealing with the shortage of labour.

There are sectors that are particularly hard hit by the shortage of labour and that have had a hard time using the temporary foreign worker program. These changes will allow them to better access and use the program, even if it's only on a temporary basis. We think it's going to be very good for those businesses—especially in hospitality and that kind of thing—that have had a harder time accessing the program in the past. They will be able to access this program to help them get back on their feet, post-COVID.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker.

Members and witnesses, we are moving to our third round of questions. We'll start with the Conservatives.

MP Chambers, you have five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Thank you to our witnesses for appearing here today on short notice. We appreciate their flexibility with schedules. It's always great to have the input of our stakeholders.

I want to pick up with the Canadian Federation of Independent Business.

We hear a lot from the government about carbon tax rebates and how families are compensated for expenses related to the carbon tax. They're not the only ones paying for goods when the carbon tax is applied, whether that's on fuel itself—which is, obviously, very direct—or indirectly on other goods. The Bank of Canada has indicated it is responsible for at least half a percentage point of inflation, and that's before the most recent increase.

Businesses don't have a rebate on carbon tax. Can you talk about how your members experience some of those costs?

[Corinne Pohlmann]

Jasmin, do you want to take this question?

[Jasmin Guénette]

I can take the first crack at it, and perhaps you want to add something afterward, Corinne.

There are a couple of things on the carbon tax. First, we saw on April 1 another increase in that tax, which is adding costs to many small businesses, especially those in agriculture. We've been saying for a couple of years now that the current carbon tax system is unfair to small business because there is no rebate system in place that is working for small businesses. They pay based on some estimate that was done in the past. They pay about half of the carbon tax, but they only receive about 8% of the rebate that was distributed.

We're calling on the federal government to make the carbon tax fairer for small businesses. We're also worried that many businesses that were impacted by the pandemic, and others, will struggle to pay the additional cost that the carbon tax will represent, and even more so in the next couple of years, when the tax will reach more than $100, and even up to potentially $170 a tonne in seven or eight years.

This is really a fairness issue. Hopefully there will be a program implemented that will allow businesses to get more of their money back and change the unfair system that is currently in place.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you. I appreciate that answer.

You brought up agriculture. I certainly hear from farmers in my riding. They benefit from a deduction on the carbon levy with respect to diesel and regular gas, but when it comes to natural gas—which, by the way, is a lower-emitting fuel than regular fuel and diesel—the only offer from the government is a rebate in which they get about 20¢ on the dollar. In fact, I had a farmer in a neighbouring riding send me a bill showing $13,000 in carbon tax just for one month with respect to natural gas.

I'm not sure where the government thinks this money is coming from. It's from the pockets of a farmer, or not hiring an additional person. Most farmers are price-takers, but you also think about the upward pressure on prices and goods that we see. This cost ends up filtering through the system.

I certainly appreciate your comments with respect to the carbon tax.

I know there are a couple of other files that the CFIB follows fairly closely, and I certainly appreciate your comments on the fiscal situation. One of the things that we did not see any language on in the budget was credit card processing fees. There was a commitment made in 2019. There was a budget commitment in 2021. We haven't really heard much more on that. Can you give us an update on how things are going for your members in that area?

[The Chair, Liberal, Peter Fonseca]

Give a very short answer, please.

[Corinne Pohlmann]

That is definitely an area that still needs to be addressed. We're still pressing for this and hoping that the federal government will move forward with reductions in the credit card fees as promised in both this budget that just passed and also in the previous one. We're going to continue to keep them accountable to move forward with that, because that's an important measure that lots of small businesses are struggling with right now.

[The Chair, Liberal, Peter Fonseca]

Thank you, and thank you MP Chambers.

We are moving to the Liberals and MP Dzerowicz for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all those who are presenting before us today. We very much appreciate your being here.

On page 79 of the budget, we do have a note around “Reducing Credit Card Transaction Fees”, so we do indicate that this issue continues to be important. We're going to continue to consult to figure out how we can get this right, and it continues to be a priority for us. I just happened to be on page 79, so when Mr. Chambers asked the question, I felt lucky that I was on that page.

My first question is actually to the Canadian Federation of Independent Business. One thing I've found in my almost seven years of being an MP is that lots of my small businesses have actually started applying for the Canada summer jobs program, and they've really benefited from it. How have you seen the response around that program within small businesses in Canada?

[Corinne Pohlmann]

Yes, it's definitely a program that is well used by small companies. We actually make an effort every January to remind them to apply, because it always feels like the application period is quite early and short and many people get upset when they miss it. It was a welcome addition when that was expanded throughout COVID as well, because, again, it's also a bit of a wage subsidy. It allows young people to get work experience and allows employers to get somebody on board whom they can hopefully groom and make into a full-time employee in the future.

It is a program that we like and support, and the changes that were made to expand it were welcome. I think the subsidy was also increased in terms of the wages for the students.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thanks for that.

Not a lot of positive things have come out of the COVID pandemic, but I will tell you that this expansion has actually educated a lot of small businesses around the program. It has helped more of them to adopt it. In turn, in my riding, it actually made a lot more students apply more locally. That's been a big win-win for small businesses as well as the Canada summer jobs program.

You've already answered the question around temporary foreign worker programs. What else can we do? There's been a big attempt by our current government to try to address the labour shortages, whether it's making some adjustments around immigration or bringing in a historic number of new immigrants. We also set up a job portal for those Ukrainians who are coming in. We've made changes to the temporary foreign worker program. We've increased the Canada summer jobs program. Now that the borders are open, we have a lot of youth coming in from other countries and filling some of those temporary jobs.

Those are all really great. What more do you think we need to do?

[Corinne Pohlmann]

There are a couple of things that could be done.

One is creating a pathway to permanent residency for temporary foreign workers. That certainly is not a straight path right now. There are some sort of convoluted paths that you can take through the provincial nominee programs, for example. Having something more formalized that allows for this would be one thing.

Another thing is from some research we've done on the shortage of labour. Automation is becoming a more successful approach that businesses have undertaken to deal with the shortage of labour, so finding ways to provide incentives to allow them to invest more in automation could help to bridge some of the gaps in some of those areas that may be more difficult to fill.

On automation, I think a lot of smaller companies may not realize that this could be an option that could help them. We had about a third of our members using it, and I think close to 60% or 70% said that it was successful in helping them actually bridge some of their shortage of labour. I think that's an area that we need to explore more to figure out how we can potentially help smaller businesses address their shortages in labour through automation.

[Julie Dzerowicz, Liberal, Davenport, ON]

That's very helpful.

I was going to ask you about the Canada digital adoption program. It's not quite the same as what you're talking about in terms of automation, but it's in that same sort of vein of trying to help to transition a lot of our small businesses into having the skills, the technology and the capability to be able to succeed in the 21st century. How is that program going?

[Corinne Pohlmann]

I think it's a bit too early to tell right now. I'm a little worried that it's a bit convoluted in terms of the application process and getting advisers and all that kind of thing. We just had a call earlier today with some of the folks who oversee that to find out what the take-up is. I think that's still something that's coming. I think the idea of it is really good, but it's just whether or not in execution it's going to be something that small businesses adopt.

There are two phases to the program, too, and the second phase is actually a little out of reach, because you have to have at least $500,000 in revenue to access it, and most small businesses are under that. That's another area that can maybe be improved for the program, so maybe lower that, because that's the one that actually gets you into the loans to get more automation into your business. Little things like that could maybe be tweaked to potentially make it more attractive to smaller companies.

[Julie Dzerowicz, Liberal, Davenport, ON]

That's very helpful. Thank you so much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

Now, from the Bloc, we have MP Ste-Marie for two and a half minutes.

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

My question is for the representatives of the Quebec Employers Council and the Canadian Federation of Independent Business.

If a representative of each organization could each answer my question in one minute, I would appreciate it.

There is a lot of uncertainty in the business world at present. There was the pandemic. Now there's inflation. Supply chains have slowed down because of lockdowns in Asia. As well, the war in Ukraine has led to an explosion of energy prices and raw materials. We also have climate change and the labour shortage causing uncertainty.

What are your members' main concerns in this regard?

How well are your members managing to weather this storm?