Finance Committee on Oct. 24th, 2022

[Daniel Kelly]

Both rates are going up this year. Both were frozen last year. For EI, employees are going to see an increase of five cents per hundred dollars in premiums. For employers, who pay 1.4 times that of employees, that means seven cents per hundred dollars in payroll.

In dollar terms, these aren't giant increases, but we have hikes as far as the eye can see, given increased EI use over the course of the pandemic. Much of that is a result of some of the pandemic-related costs not being borne by general government revenues but being put on the EI file.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Did I hear you say you wanted that ratio of employer to employee to change?

[Daniel Kelly]

Yes. There are several recommendations. The first is that we've recommended that EI rates be frozen for 2023, as the government wisely did for 2021 and 2022.

Second, we would love to see those rates equalized over time so that employers and employees would pay the same rate, or at the very least so that small employers would pay the same rate as employees on the first x dollars of their payroll. That's another pathway to the same end, which is to reduce the payroll tax hike that small firms are facing.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

If employers and employees were to pay an equal share of the EI premiums, that means the employee portion as a share of the total would increase.

When I think about what I'm hearing from my constituents in Etobicoke Centre—I think we're all hearing about it and we talk about it in the House all the time—one of the challenges is the cost of living. Wouldn't that impose an additional burden on the very people who are suffering most—the employees and the constituents who are trying to pay their bills?

[Daniel Kelly]

It would, absolutely. This is why this has been a long-standing recommendation of CFIB. The time to do it would have been when EI rates were starting to drop. You would have accelerated the size of the reduction for businesses or small businesses and then allowed the employee rate to stay constant.

Given that the window has closed, another way to do it would be to bring back something like the small business job credit, which allowed the small employer to have a reduced EI rate on the first x amount of payroll. I think in the previous rounds it was $600,000.

I agree with you. Right now, with rate hikes going on, implementing it may need to be phased in over time or through a different pathway whereby it is, in fact, subsidized by general government revenue. At the moment, finding ways to reduce the EI burden on small employers is our priority.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Mr. Macdonald, I only have about a minute and a half left, but I want to ask you a question.

There's been a lot of conversation here today, certainly from the members opposite—we hear it in the House every day, I'd say, triple as often as we used to hear it—that they object to any kind of increase in EI premiums or CPP contributions. They've talked a lot, and today we've heard a lot about how this would save money, but I want to make sure we examine the consequences.

What would be the consequences of not ensuring that CPP premiums and EI premiums or contributions don't keep up adequately to ensure that we have enough when people need to draw on their pensions or need to draw on EI?

[David Macdonald]

I suppose there are two options: Either the government can fund the difference or we can cut back on those benefits. Those are the two ways that, in a straightforward fashion, you can cover any shortfalls that happen to occur because businesses would like to pay less into those funds.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Basically what I hear you saying is that pensioners wouldn't receive the pensions that we believe they should receive to keep up with the cost of living. Those who lose their jobs wouldn't have the EI benefits that they need to keep up with the cost of living.

The alternative to doing that would be to have taxpayers fund that, which means the very people who are suffering—those pensioners and those people who lost their jobs—in part would have to pay the taxes necessary to fund it.

Is that basically what you're saying?

[David Macdonald]

It's a very straightforward calculation. If you're missing money coming in on one side, you've got to make that up somehow.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I think it's important we underline the consequences of some of the things that we're hearing from the opposite side.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker.

We'll go to the Bloc and MP Ste-Marie or two and a half minutes.

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

Thank you, Mr. Chair.

My question is for Daniel Kelly, of the CFIB.

Mr. Kelly, my question is about something you said in your presentation, at the beginning of the meeting. I'm talking about the government's announcement a few weeks ago regarding the repayment of CEBA loans. If I'm not mistaken, you said 55,000 small and medium-size businesses were affected. The government announced that the $10,000 to $20,000 forgivable portion of the loan would no longer be forgivable. That really worries me.

I don't yet have a clear understanding of what's behind the move. It seems that the government told financial institutions at the outset to be generous and grant the loans to a large number of businesses, but that the government is now going back on its decision. A business with revenue above or below the established thresholds will no longer be eligible for loan forgiveness. On top of that, I gather that, if the government or the financial institution lost any of the paperwork, the business would not have access to loan forgiveness, with no way to appeal.

Would you mind explaining that again? Could you also tell us what the government should do?

[Daniel Kelly]

I'm so glad you asked this question, Monsieur Ste-Marie. It's a really important one.

Just in the last week, about 50,000 small business owners across Canada have begun receiving emails from their bank saying that they didn't actually qualify for the loan they received two years ago in the middle of a worldwide pandemic, so they have to pay back the full amount instead of getting to keep the $10,000 forgivable portion that they had been counting on.

Part of the problem was that the loan program was fashioned very quickly. Many businesses slipped through the cracks and didn't get a loan at all, but should have, but some did get a loan and found there was a request for more information from their institution. Some business owners missed that communication altogether. Others did reply to it and have been found now to be ineligible.

I think it's super-unfair two years later to say to the business owner who applied with all good intentions that they're now going to have to repay that loan in full, losing its key benefit.

We're getting flooded with calls at the Canadian Federation of Independent Business. We've been tracking this issue for quite some time. We certainly take no truck nor trade with anybody who deliberately deceived government, but we think that those businesses that did get the loan should continue to have that.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Kelly. Thank you, MP Ste-Marie.

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

[Leah Gazan, NDP, Winnipeg Centre, MB]

Thank you.

I think it's important to highlight this whole issue of corporate greed for the money that the government's leaving on the table for corporations and loopholes like the $30 billion that's being squirrelled away. To know that this is actually legal in Canada....

Meanwhile, the CRA is putting resources into executing a Canadian child benefit clawback from families who accessed CERB, often under duress, with encouragement from the current government to take it and deal with it later, knowing that the ones most affected right now are single parents with multiple children and knowing that the cost during the pandemic increased significantly in having to feed kids not just one time a day but 24 hours a day.

I think it's safe to say that for the money delivered to families in a time of crisis and under unclear rules, the onus shouldn't be placed on families that are already struggling. When you take that and couple it with high inflation right now, in trying to gouge back, the government isn't going to get this money back.

I'm wondering, David, if the CCPA would agree that the government's resources are better spent on closing loopholes corporations are availing themselves of, rather than going after single moms for a meagre amount of money and going after low-income families and single parents with multiple kids.

[David Macdonald]

In the case of CERB, for instance, it certainly is unfortunate that two years later, letters are still going out from the CRA to people who were deemed ineligible two years after the fact and are required to pay this money back.

This is a program that should be immediately ended, frankly. The government should make the call to CRA and say that unless there's actual fraud by these folks.... It's two years ago. We should stop doing this.

I think what's interesting is that the whole framework of how CERB was delivered is being reimplemented with the Canada housing benefit one-time transfer and the dental care benefit, which is a one-time transfer through CRA. We need to be much better, frankly, at getting these programs out the door efficiently, but not coming back two years later and asking for a thousand, two thousand, five thousand dollars back from people who probably don't have the money to pay it and didn't apply fraudulently, but probably still needed the money.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Gazan. That's the time.

We now go to the Conservatives and MP Chambers for five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Thank you to all our witnesses. It's a very rich panel with a lot of options.

I'd like to start with Mr. Currie, not just because the agriculture industry is so important to Canada but also because he's close to my home riding of Simcoe North. He's not far away, in the Collingwood area.

Mr. Currie, you mentioned the fertilizer tariff in your opening remarks and you were hoping that money could be reinvested in the agricultural sector. Have you had much success in understanding how the government might use the money it's collecting from the tariff?

[Keith Currie]

Up to this point, no. We certainly have been willing to sit down and have a discussion about how that can be reinvested in particular in eastern Canadian farmers, who actually paid the tariff.

However, we also need to keep in mind that because of this tariff increase on the cost of fertilizer, our western Canadian producers have all seen an increase in fertilizer prices as well. Therefore, we need to find a way to work with the government to reinvest that money, which is a straight-on tariff because of what is going on with the war in Ukraine. For example, how can they use it positively to help us with things like technological advancements for climate initiatives?

We aren't down to brass tacks yet, but we are willing to sit at the table and have those discussions.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you. That's very encouraging.

We have a private member's bill before the House with respect to a carbon tax exemption for propane and natural gas. There is a carbon tax exemption for the agriculture industry for diesel and regular fuel.

I had a farmer in my riding send me a bill from last October that showed a carbon tax charge. The carbon tax was $13,000, and it had HST charged on top of that. That's $1,300 in extra taxes on top of a carbon tax.

How important would it be, on the cost side of relief, to be able to provide farmers with a bit more certainty in ensuring they could get carbon tax charges removed from natural gas and propane?

[Keith Currie]

I think it's huge, because farmers reinvest any money they can save. For example, a friend of mine retrofitted his poultry barn not that long ago, not because of the carbon tax but because he was trying to find more efficiencies. He has made his facility as efficient as possible, but the carbon tax added nearly $60,000 a year in extra costs to his operation. If he had that money to add further value to his livestock facility, think of the savings that would mean and the greenhouse gas emissions reduction in that building alone.

The more we can save, the more we'll invest and improve.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much.

Moving to the Chamber of Commerce briefly, I believe you talked about payroll taxes earlier. In looking at a way for governments to increase revenue, one of the worst ways to do that is to tax labour the way governments do with respect to, say, EI premiums, because that's a tax on every single job and worker.

I'm wondering if you believe the economy can sustain the current plans or if there's a better way to raise revenue for the government.

[Alex Gray]

The Canadian economy—I would hope, at least, and I think most outlooks agree—is resilient. Despite uncertain economic times ahead, it's still a job-seeker's market, so I hope there is a degree of resilience there.

As to the fundamental point you're making, taxing investment is a bad thing. Taxing labour and productivity is a bad thing. At the chamber, we'll always stand behind that. We do fundamentally agree that—I may have made this point earlier and I apologize if I repeat myself—the need for revenue needs to be balanced with the need for growth. If you have that out of whack, the economy will suffer.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

In my remaining 10 seconds, Mr. Chair, I think the need for revenue does need to be balanced with the need for growth. The government has never made as much money as it's making right now, so I would submit that we don't actually need the government to get more revenue.

Mr. Chair, I had your indulgence a couple of meetings ago, so I'll return whatever time I have to the floor.

[The Chair, Liberal, Peter Fonseca]

I appreciate that, MP Chambers.

We are getting close, so this will be our last questioner for the end of this third round and the end of our meeting.

We have MP Chatel up for five minutes for the Liberals.