Evidence of meeting #6 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sector.
A video is available from Parliament.
4:05 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
What I'm trying to arrive at here is that municipal taxes don't go down just because your revenue goes down—because it's a fixed asset at the end of the day.
4:05 p.m.
President and Chief Executive Officer, Hotel Association of Canada
That is correct.
4:05 p.m.
Conservative
4:05 p.m.
President and Chief Executive Officer, Hotel Association of Canada
Do you mean tax?
4:05 p.m.
President and Chief Executive Officer, Hotel Association of Canada
Municipal tax. I would have to come back to the committee with something more specific on that as a percentage of fixed costs. I will do that following this appointment.
4:05 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
Needless to say, if you had to go out of business, those municipal taxes would be zero for quite some time on that asset.
4:05 p.m.
President and Chief Executive Officer, Hotel Association of Canada
Yes, absolutely.
4:05 p.m.
President and Chief Executive Officer, Hotel Association of Canada
The fixed costs also include mortgages.
4:05 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
I'll move to Mr. Saretsky now.
Mr. Saretsky, you talked about the overcompensation of real estate markets based on the government's stimulus measures. Can you extrapolate on that, please, and expand on what you mean? How much has that caused the overvaluation and overpricing of real estate in Canada?
4:05 p.m.
As an Individual
Obviously, when you go through recessions, typically.... I think at the onset of the pandemic, everyone was talking Great Depression. Certainly nobody wants that. What ended up happening was that certainly it was rushed out the door, and probably rightfully so, but in the second quarter of 2020, labour income declined by about $20 billion nationally. At the same time, government transfers to households grew by over $70 billion. Basically, three dollars went out the door for every one dollar lost in income.
What happens is that you have a situation where in a recession, for example, typically you'd see a decline in consumer demand. But that was kind of offset by government transfers while businesses reacted by obviously shutting the doors, thinking the worst was coming. So what you have is basically too much demand out there, because it was supported by government to households.
Again, I'm not saying that's the wrong decision to make, but now we're starting to see that obviously in consumer price inflation. Consumer price inflation expectations right now in Canada are running at a 20-year high. Half of businesses next year are expecting to raise prices by 5%—
4:05 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
I'm sorry, Mr. Saretsky, but I'm running out of time here. Your expertise is in real estate. The inflation caused in real estate assets has been quite severe.
4:05 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
What would you say about an extra $9 billion coming into the system? Would that inflate prices even further?
4:05 p.m.
As an Individual
I think it definitely has the potential. I think for every action there's a reaction. I think what we're seeing is that the bulk of the credit creation is going into the housing market. You can see that consumer loan growth, residential mortgage loan growth, is running at decade highs, 10-year highs. If you look at—
4:05 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, Mr. Saretsky.
We're now moving over to the Liberals.
Ms. Dzerowicz, you have six minutes.
4:05 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thank you, Mr. Chair.
I want to say a genuine thanks to all of our presenters for their presentations and their introductions today.
I'll start off with you, Ms. Grynol. It's nice to see you. Thanks for coming back. You've been a very reliable witness and a very big champion, I think, for those industries that have been hardest hit.
I just want to reiterate that you're wearing two hats. One, you're representing the Hotel Association of Canada. You're also representing a consortium of those organizations and businesses that are also the hardest hit. Do I understand that correctly?
4:10 p.m.
President and Chief Executive Officer, Hotel Association of Canada
That's correct.
4:10 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Perfect.
With your hat on for the Hotel Association of Canada, you talked a little bit about how you're quite anxious to see this bill get through as soon as possible. If we were to delay the passing of this bill until after Christmas, could you elaborate a little bit more clearly on what the impact would be on your hotel stakeholders if we waited to implement this bill?
4:10 p.m.
President and Chief Executive Officer, Hotel Association of Canada
Sure. The survey we did, both of the hotel industry and the Coalition of Hardest Hit Businesses, revealed a very similar result. In our case, 70% of hotels would go out of business in this country permanently if there were not more support. That was prior to this program being introduced.
If this bill doesn't pass, there will be a disruption in the subsidy applications. At the end of this month, operators will go to access the subsidies, which I discussed in the previous question, to cover those fixed costs and they will not be available to them. We don't know how long it will take by the time the House comes back in January to be able to look at this bill. Are there going to be amendments? It could be anywhere from one to four months. If that happens, we will see a collapse in the sector. We will see significant business failures if there is an interruption of the subsidies that are the lifeline for this sector today.
4:10 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thank you for that.
You also talked a little bit about the workers within the hotel industry. Can you explain a little bit more about who those workers are and how they will be impacted if this bill does not pass before Christmas?
4:10 p.m.
President and Chief Executive Officer, Hotel Association of Canada
Our workers are the lifeblood of this industry. To be clear, we have lost a lot of workers who have permanently moved on to other sectors, but we have maintained as many as we possibly could through the generous support of the government with the wage subsidy program. Those workers' jobs are absolutely in peril. If there are no businesses, there are no jobs.
We are desperately trying to keep the businesses afloat and desperately trying to keep as many as we can of our long-standing employees, whose hearts are in hospitality and who have spent their lives building their skills and experience. Here I'm talking about at all levels, from senior levels right down. We are the industry of first Canadian jobbers and new Canadians and immigrants. Most of Canada's vulnerable workers are employed in the tourism and hospitality sectors. They are who is at risk here. We are desperately trying to keep them employed.
4:10 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
That's perfect. That's very helpful.
In terms of your HAC, for the hardest-hit industries and the hardest-hit business recovery program, if you actually go through the legislation, you'll see a substantial list of which organizations and the types of activities they offer would be eligible for this recovery program. Do you agree with the list that has been created? Also, were you consulted in the process?
4:10 p.m.
President and Chief Executive Officer, Hotel Association of Canada
Yes, we were consulted in the process. We've been working very closely with government and with officials on the creation of that list. Ultimately, it's the government's decision on who gets in there. We felt that list was generous at the end of the day, and we have no concerns on who was included in that list at this stage.