Finance Committee on Oct. 24th, 2022

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 63 of the House of Commons Standing Committee on Finance. Pursuant to Standing Order 83.1 and the motion adopted on Wednesday, September 28, 2022, the committee is meeting to discuss pre-budget consultations in advance of the 2023 budget.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

I would like to make a few comments for the benefit of the witnesses and members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike. Please mute yourself when you are not speaking. For interpretation, those on Zoom have the choice at the bottom of their screen of floor, English or French. Those in the room can use the earpiece and select the desired channel. I would remind you that all comments should be addressed through the chair.

For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard.

Members, before we get to our witnesses, you have received the budget for the PBC from the clerk. We're just looking to adopt it.

Are we good?

[Some hon. members]

Agreed.

[The Chair, Liberal, Peter Fonseca]

Thank you, members. It has been adopted.

Also, for Bill C-228 the clerk has requested that our independent member is to submit any amendments in both official languages no later than 6 p.m. on Thursday, October 27, 2022. If everyone is okay with that, we will follow the same deadline, so get any amendments in by this Thursday at 6 p.m., please.

Is everybody okay with that? Terrific.

I would now like to welcome our witnesses.

From the Canadian Centre for Policy Alternatives, we have David Macdonald, senior economist. He is coming to us via video conference.

From the Canadian Chamber of Commerce, we have Alla Drigola Birk, senior director of parliamentary affairs and small and medium enterprises policy, and Alex Gray, senior director of fiscal and financial services policy.

From the Canadian Federation of Agriculture, we have Keith Currie, first vice-president, and Scott Ross, executive director.

From the Canadian Federation of Independent Business, we have Daniel Kelly, president and chief executive officer.

From Équiterre, we have Marc-André Viau, director of government relations.

Finally, from S.U.C.C.E.S.S., we have Queenie Choo, chief executive officer, who is with us via video conference.

With that, witnesses will have up to five minutes for opening remarks. We will start from the top with the Canadian Centre for Policy Alternatives.

You have five minutes.

[David Macdonald, Senior Economist, Canadian Centre for Policy Alternatives]

Thank you, Mr. Chair.

I'd like to thank the committee for their invitation to speak today concerning the 2023 federal budget. My presentation today will review only two of the 24 chapters in our own “Alternative Federal Budget 2023”, which we released about a month ago. I'll focus my comments today on some proposed measures on income security and taxation from this year's alternative budget.

First of all, it is worth reflecting on the incredible poverty impacts of federal supports during the pandemic. The federal poverty reduction strategy plan targeted reductions in poverty of 50% between 2015 and 2030. Poverty rates stood at 14.5% in 2015, but they actually fell to 6.4% in 2020, a reduction of 56%, besting the long-term target of the PRSP a decade early. What this points to is that the federal poverty reduction goals are not overly ambitious but were, in fact, already achieved two years ago. Unfortunately, the 2020 poverty data will be a blip, as rates will rise again in 2021 due to the expiry of the Canada emergency response benefit and enhanced employment insurance, among other one-time supports.

We need to build on these lessons of pandemic supports to create sustainable reductions in poverty in Canada. Our alternative budget envisages these supports across what we're calling four pillars of income security in Canada.

The first pillar is for families with children. The Canada child benefit already creates much of this pillar, but it can be improved. This year, we propose a supplement to the CCB called the end poverty supplement. It provides additional supports for families with children in particularly deep poverty, which will amount to up to $8,500 more for the first child.

The second pillar is for seniors. It is already in place via the old age security, the guaranteed income supplement and the Canada pension plan. Although we propose lowering the age of eligibility for the GIS to 60, poverty rates remain particularly high for Canadians ages 60 to 64 before they gain access to seniors programs at age 65.

The third pillar is a new program that we're calling the Canada livable income. It would be a universal benefit for Canadians of working age without children, and it fills an important gap in our present system for working-age Canadians. The Canada workers benefit is meant to fill this gap to some degree, but it does so poorly, as it requires employment income and even then remains inadequate. One of the primary reasons Canadians live in poverty is that they don't have employment income, so the CWB design is a flawed one. Our proposed Canada livable income would provide $5,000 for individuals or $7,000 for couples who live in particularly deep poverty.

The fourth pillar would be the creation of a Canada disability benefit. While this would be a new pillar of income security, it certainly is already under consideration by the federal government. Our alternative budget lays out specific levels and phase-out criteria for such a benefit, and it proposes implementation criteria over a three-year time frame.

Speaking of income security, we would also propose a rapid support guarantee. The goal here would be for the CRA to provide income supports within a month of Canadians' becoming eligible. This would be instead of the present situation where Canadians have to wait until tax time or up to a year later to receive important income supports when their circumstances change. The CERB illustrated that supporting Canadians could happen much faster than we've been traditionally used to.

Our alternative budget does not shy away from the revenue side. We do propose higher corporate income taxes in Canada, but not just on the banking sector, which was achieved in budget 2022. Corporate Canada has been capturing record amounts of our economy as profits during this inflationary period. Plenty of focus recently has been on grocery store profits, but this is actually a small part of a much larger picture. The excess profits we've seen since the end of 2020 have really been driven by oil and gas extraction and refining, the mining sector, real estate industries and banking. Our alternative budget examines the revenue from higher general corporate income tax rates. However, we also examine the revenue from changes like a minimum tax on book profits, capping the deductibility of executive pay, limiting the dividend tax credit to actual taxes paid and many other suggestions.

What I have discussed here today only briefly outlines the contents of two chapters. I encourage members to examine those chapters and the 22 other chapters in our alternative budget, which include detailed policy proposals for child care, long-term care, climate change, infrastructure and more.

Thank you very much. I look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Macdonald. You're right on time.

Now we will move to the witnesses from the Canadian Chamber of Commerce, who are in the committee room today.

We'll hear you for five minutes, please.

[Alla Drigola Birk, Senior Director, Parliamentary Affairs and Small and Medium Enterprises Policy, Canadian Chamber of Commerce]

Thank you, Mr. Chair and fellow committee members, for having us here today.

My name is Alla Drigola Birk and I am with the Canadian Chamber. My colleague Alex and I are pleased to be here to speak on behalf of the 200,000 businesses that the Canadian Chamber represents through our chamber network, industry association and corporate members.

It is no secret that right now is a critical time for the Canadian economy. Canada faces strong headwinds as our economy comes off the postpandemic bounce and heads towards challenges that originate both at home and abroad. Just as businesses have begun to recover from the pandemic, they are facing the spectre of supply chain bottlenecks, a tight labour market, rising inflation and significant debt loads.

The most recent Canadian survey on business conditions, conducted by the Canadian Chamber and Statistics Canada, identified three key areas that will be the biggest challenges for businesses over the next three months. Of the three, rising costs was by far the top challenge. This includes rising inflation—a concern for 60% of all businesses—rising input costs, rising transportation costs, rising interest rates, rising debt costs and more. I would like to highlight that the majority of businesses reported that they are unable to take on more debt or do not know if they can take on more debt, with 52% of all businesses falling into this category. This is especially true for small businesses with fewer than 20 employees.

The second biggest obstacle will be labour challenges, including recruiting and retaining employees, as well as an overall shortage in the labour force. Finally, the third most pressing obstacle is the ongoing supply chain issues.

We draw these points to your attention today because they underscore the issue at the heart of our key ask, which is that the government support businesses via measures that support economic growth. The opportunity before the government for budget 2023 is to support Canada's businesses, the workers they employ and, in turn, the economy as a whole.

To assist in identifying some key items to grow the economy, the Canadian Chamber has brought forward 22 distinct recommendations under six themes in our pre-budget submission. Due to time constraints, we will not go into each recommendation in detail today, but I want to highlight two recommendations in particular, and introduce a new one.

The first is to ensure that businesses have the right people in place. This needs to include working with the provinces and territories to establish more supports to upskill and retrain workers, to reduce the barriers to hiring highly skilled foreign talent and to enhance the systems and processes for foreign credential recognition. Many of these are issues that span both provincial and federal jurisdictions, so constructive, effective collaboration is critical.

Second, we recommend that Canada modernize its regulatory regime by committing to evidence-based, data-driven regulation and applying an economic lens to all regulatory mandates. This is critical for ensuring that new programs and regulations take into consideration the economic impacts they have, similar to how the government has implemented a gender lens for new initiatives.

Third, we need to ensure that the small businesses that took on a significant amount of pandemic debt are not being unfairly penalized. This speaks to recent reports of CEBA loans being recalled for businesses that applied in good faith, were approved based on the criteria and are now at a loss as to why they can suddenly no longer receive the forgivable portion. The CRA must explain why these small businesses no longer qualify for the forgivable portion, and must ensure that non-fraudulent cases are being handled appropriately and fairly based on the terms of their original CEBA agreement.

I will now pass it over to Alex to speak to some of the key tax measures in our submission.

[Alex Gray, Senior Director, Fiscal and Financial Services Policy, Canadian Chamber of Commerce]

Thanks, Alla.

In the interest of time, I'll focus on two measures that would improve Canada's position in a rapidly changing international tax environment.

First, the chamber believes the government should stand still on the digital services tax act, drop its retroactive application and fully support the implementation of the OECD two-pillar plan that has been agreed to by over 130 countries. Despite signing a multilateral agreement to standstill DST-like measures, concerns remain about the government's intent to move forward with legislation on a DST with retroactive enforcement to January 2022. Such action would invite economic retaliation, impose potential double taxation scenarios, complicate tax planning and undermine efforts to secure support for the OECD agreement. Given the possibility that a DST would flow through to Canadian SMEs, most of which have increased their use of digital services offered by multinationals since the pandemic, this tax would also impose a significant economic burden on said companies.

Second, we call on the government to implement a three-year extension of the accelerated investment incentive at the current rate, with an expanded scope to include mining and metal manufacturing activities, while delaying the phase-out period to fiscal year 2027. Maintaining this deduction for the first year of acquiring eligible depreciable assets would encourage businesses to invest in capital assets while ensuring competitiveness for Canadian businesses vis-à-vis the United States given related U.S. federal tax changes.

Ultimately, we believe a competitive tax system should provide businesses with the crystal clarity and capital needed to invest in the technologies and tools to thrive.

Thank you. We look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Drigola Birk and Mr. Gray. It's good to see you back before the finance committee.

Now we're going to hear from the Canadian Federation of Agriculture for up to five minutes. Keith Currie and Scott Ross are in the room.

[Keith Currie, First Vice-President, Canadian Federation of Agriculture]

Good afternoon and thank you, Mr. Chair.

As you heard in the introductions, my name is Keith Currie. I am the first vice-president of the Canadian Federation of Agriculture. Along with my colleague Scott Ross, our executive director, we represent 190,000 farm families from coast to coast to coast across Canada. I'm also an eighth-generation farmer in the Collingwood, Ontario area.

CFA's pre-budget recommendations focus on how we can harness the agriculture sector's immense potential in the fight against climate change while continuing to produce food for Canada and the world. I'll touch on a few key priorities from our submission, but we'll be pleased to speak further to any recommendations that CFA has put forward.

The first priority I would raise relates to the tremendous financial pressure farmers have faced as a result of skyrocketing fertilizer prices over this past year, which has been exacerbated by the 35% tariff eastern Canadian farmers endured on Russian fertilizer imports. Average prices for urea fertilizer have increased from under $600 a tonne in January of this year to over $1,200 by spring planting.

That is why our top priority is to see the revenue from these tariffs reinvested into financial relief for farmers so they can invest in infrastructure and other tools to help them become more resilient to supply chain disruptions through, for example, investments in on-farm fertilizer storage and precision agricultural technologies. Most importantly, financial relief ensures Canadian producers maintain the financial health necessary to continue putting food on the table for Canadians and consumers around the world.

For our second priority, I would highlight the environmental targets the Government of Canada has set for our country: a reduction in 30% of fertilizer emissions and a commitment for the country to be net zero by 2050. Agriculture is obviously central for the first, but also can be incredibly impactful for the second. However, one of the biggest hurdles to achieving these goals will be adoption of further best practices at the farm level. I say it that way because farmers are already widely adopting practices to reduce GHG emissions, such as seeking agronomic advice from certified crop advisers, or CCAs, and adopting 4R nutrient stewardship practices.

For those in the room who haven't heard of it, 4R nutrient stewardship is a program with a framework oriented around the right fertilizer source, at the right rate, at the right time and in the right place. Recent industry analysis has found that our industry can achieve a 14% reduction in fertilizer emissions from 4R practices alone.

While many of our farmers already have a long-standing commitment to 4R practices, there is a need to expand and advance adoption of 4R certification across Canada to meet the government's emission targets. That is why our second priority is to invest in knowledge transfer by promoting 4R and other best practices and by supporting 4R training opportunities for agrologists that tailor these plans to farming operations across Canada.

To achieve the government's proposed goals while meeting increased food demand, farmers need guidance from experts and support to adopt the practices they suggest. To truly harness their potential in fighting climate change, farmers need assistance in managing climate change itself. Canada's business risk management programs must be improved to consider climate risk management and climate readiness. Participation remains low in AgriStability, a program that assists farmers facing severe income losses.

Despite recent enhancements that we applaud, farmers continue to note difficulty accessing AgriStability support. That is why our third priority is to increase the coverage level for AgriStability for each successive year without payment, up to 85% of the historic reference margin. Similar to things like car and house insurance where your rates reflect your risk profile, we would propose the same: increasing the payment trigger for every year a producer goes without making a claim and reducing it when payment is made. This would encourage participation and investments in on-farm climate risk management.

For the AgriRecovery program, which helps farmers recover from natural disasters, a collective review must be conducted after any program response. This review would assess and report on measures that could prevent similar risks in the future, and improve future responses. For this to truly drive change, it must bring federal, provincial and territorial governments and farmers together in a shared assessment.

Finally, our last priority speaks to the chronic labour shortages that cost farmers over $1.9 billion each year in lost sales. CFA and our partners are developing a national agriculture, food and beverage manufacturing workforce strategy that will be finalized in 2023, but support is needed for its implementation, first, through new funding to develop an industry-led secretariat to oversee and implement this ambitious plan and, second, to build upon the “step up to the plate” initiative and establish a public awareness campaign highlighting the important role of the sector and the career pathways it provides to encourage Canadians of all ages to consider a career in agriculture.

At CFA we believe that agriculture is one of the most important tools that Canada has for meeting its environmental and economic goals. We hope you agree.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Currie, for your opening remarks.

Now we'll hear from the Canadian Federation of Independent Business. We have Daniel Kelly, who is the president and chief executive officer, via video conference.

[Daniel Kelly, President and Chief Executive Officer, Canadian Federation of Independent Business]

Thank you so much, Chair. It's nice to see all the committee members on the screen today. I'm sorry that I'm not there with you in Ottawa, but I'm happy to be in Toronto today.

Look, I don't need to remind you of the crazy year that Canada's small and medium-sized businesses have been through, and the crazy couple of years over the course of the pandemic. However, I think I need to share with you just how critical things are right now.

Many think the pandemic is very much in the rear-view mirror for small business owners as the economy has bounced back. That's not what we're hearing from our small and medium-sized firms—the 95,000 members that are part of the Canadian Federation of Independent Business. In fact, only 42% of small businesses tell us that their sales are back to normal levels. Under 50% of Canada's small business owners are still under water with respect to their sales levels and they haven't seen those materialize.

Almost two-thirds, 64%, are facing pandemic-related debt. Of our members, 40% haven't repaid any of the debt they have taken on during the course of the pandemic. While pandemic support programs, particularly those from the federal government, were immensely helpful to many small businesses, our data shows that only about a third of the pandemic's negative financial repercussions were covered by support programs. Two-thirds are still on the books of business owners right now.

We have, right now, major labour shortages and cost increases on almost every line of the budget postpandemic. These are really, really challenging times for small and medium-sized firms. Added to that is the risk of a nasty recession in the next few months. All of this is not incenting business owners to expand or to get anywhere close to back to normal.

What should the government do though? How can the finance committee and the federal government help?

For one thing, our main request is not to make it worse. Unfortunately, there are several plans on the part of the federal government to do exactly that—to make a bad problem much, much worse for small and medium-sized companies. We don't have to look that far. In just a couple of months, on January 1, we're going to see a significant increase in Canada pension plan premiums, with hundreds of dollars taken out of every Canadian's paycheque and out of the payroll budgets of every Canadian employer. EI rates are now set to rise again on January 1 after a helpful two-year freeze. Of course, we have a whole host of other issues on the regulatory front that are making challenging times that much worse.

One of the things that may surprise you is that health care has emerged as the number two priority for small and medium-sized firms. It was number 15 only a few short years ago. Health care capacity is a huge priority for small and medium-sized firms across the country. We're just beginning to grapple with what that looks like.

I want to spend a few minutes on some of our key recommendations. I want to talk about the CEBA loan program. This was a program that was immensely helpful. Nearly 900,000 businesses across Canada took out a CEBA loan. You should know that just in the last couple of weeks—and I think the chamber noted this in their testimony a second ago—50,000 small and medium-sized firms have had their CEBA loan recalled by the bank. Basically they are losing the forgivable portion as they've been reconsidered and are now deemed ineligible.

Members of Parliament are going to start, if you haven't started already, to hear from tons of business owners who are losing the CEBA loan and who are now going to be forced to lose the $10,000 forgivable portion, for most who took out the $40,000 flavour. We're urging government to actually consider forgiving a larger chunk of the CEBA loan. We're suggesting that 50% should be forgiven by the federal government at this time. We think that would remove more debt from the backs of small business owners. That certainly would be helpful in ensuring that more of them survive.

On the payroll tax front, we're urging the Deputy Prime Minister to go to the provincial governments and ask if we can pause the CPP increase that is set to go into effect or, at the very least, overturn the recent decision on the part of the feds to increase the EI rate that is set to go up.

If you're not prepared to do any of that, I urge you to consider something that the Tories and the Liberals mutually put in place around the change in government. The Conservatives put forward a small business job credit that effectively lowered the rate of EI for small employers down to 1.2% of that which was paid by employees. That was then delivered by the Liberal government when it first took power, and we're urging you to reconsider the small business job credit as a means of reducing the payroll tax burden on small firms.

We need progress on credit card merchant fees. An outstanding commitment the Liberals promised small business owners in the 2019 campaign was that they would have a further reduction in credit card processing fees. That has not been delivered. The government promised it again in the 2021 budget, but it has not been delivered. In the 2022 budget, it has not been delivered. We're hoping that there may be some signs of that either in the fall economic statement or in the months ahead. We are urging you to make progress on this front.

We also support the chamber's suggestion a moment ago on making more permanent the phase-out of the accelerated capital cost allowance. That measure was very helpful, and I think that sends the right messages.

There are many other ideas on our plate on carbon taxation, small business deductions and thresholds, but I'll keep my testimony to that.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Kelly. There will be a lot of time during questions.

Now, via video conference, we'll have Équiterre, with Monsieur Viau, director of government relations.

Go ahead, Monsieur Viau.

[Marc-André Viau, Director, Government Relations, Équiterre]

Mr. Chair, members of the committee, good afternoon.

My name is Marc‑André Viau. I am the director of government relations at Équiterre. I represent a non-governmental organization that has been working in the environmental field for almost 30 years. We are also members of the Green Budget Coalition, which will be presenting recommendations later this week that will complement this testimony.

Our organization works on four core pillars, which are reflected in our brief. The first is food systems—so agriculture and food. The second is sustainable mobility. The third is, of course, climate. The fourth is everything related to consumption and waste management issues.

I should note that our recommendations also take into account the current economic and fiscal context. They are designed to have a positive impact on Canadian families, while helping to lower the cost of living and addressing climate change.

Let's start with the mobility issue. I would like to put three recommendations on your radar screen.

The first is to modernize the incentives for zero-emission vehicles, or iZEV, program to make it more equitable and encourage active mobility.

First, we advocate reforming the structure of the iZEV program to make it a self-funding program and thereby free up fiscal capacity for the government.

Next, we propose making used zero-emission vehicles eligible for the iZEV program. This would enable families who do not have access to new ZEVs, owing to their high cost, to make a greener choice.

We also propose to tailor incentives for ZEV purchases based on household income and to cap eligibility based on income.

Finally, we believe it is necessary to expand the program's scope by making power-assisted bicycles eligible. It has been proven that power-assisted bicycles replace automobile trips, cost less than an automobile, and support greater distances in active transportation.

The second mobility recommendation is to move up permanent support for the operations of transportation companies to fiscal year 2024‑25 and increase the amounts provided for operations. This fund would normally start in 2026‑27, but we see that transportation companies have not recovered their pre-pandemic ridership, while roads are oversaturated.

The third recommendation is to make electric school buses eligible for the incentives for medium- and heavy-duty zero-emission vehicles program. As we know, the benefits associated with electrifying school buses are many. Eliminating diesel buses improves air quality for our children and reduces greenhouse gases and long-term operating costs.

I would now like to say a word about agriculture. This will echo what the representative from the Canadian Federation of Agriculture mentioned, at least some of his recommendations. As 2023 is the year the new agricultural policy framework will be implemented, it will be important for the strategic directions behind that plan to be reflected in Agriculture and Agri-Food Canada's funding.

We are proposing a series of measures to achieve this.

First, we want programs to make environmental risk management a priority.

We also believe it is important to make funds available to support the training and hiring of new advisory agents. The agronomic advice currently provided is too often tied to the sale of chemical inputs offered by industry and unfortunately is not always the best option for producers.

We also believe it is important to develop a Canada-wide strategy on soil health.

Finally, we recommend enhancing the on‑farm climate action fund to include new practices such as agroforestry, soil compaction prevention and buffer zones. This is obviously about increasing the available funding.

In closing, I would like to draw your attention to food issues.

I don't think anyone here is insensitive to the rising cost of groceries. This is a good time to remember that, in Quebec, 15% of children live in food insecure families. For these young people and their families, the current rise in food prices has very significant consequences.

One of the solutions advocated by the Quebec group of the Coalition for Healthy School Food, of which we are a member, is the implementation of a universal school feeding program for all students, so that young people can have access to healthy meals in school. This program, focused on a healthy, local food supply, is a winning recipe for youth across the country.

In the short term, we believe that the government can enhance and expand existing school feeding programs, as well as build the infrastructure and capacity of partner institutions and organizations that provide these programs to schools.

We have additional recommendations in our brief, which I encourage you to read. We may have an opportunity to discuss them later.

Thank you for listening to me. I will be happy to answer any questions you may have.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Viau.

Now, via video conference, we're going over to the west coast to hear from S.U.C.C.E.S.S. We have Queenie Choo with us, who is the chief executive officer.

Go ahead, Ms. Choo.

[Queenie Choo, Chief Executive Officer, S.U.C.C.E.S.S.]

Thank you so much.

Good afternoon, and thank you for inviting me to present today.

My name is Queenie Choo, as mentioned, and I am speaking to you from Vancouver, the traditional, ancestral and unceded territories of the Coast Salish peoples, specifically the Musqueam, Squamish and Tsleil-Waututh nations.

As mentioned, I am the CEO of S.U.C.C.E.S.S. Our organization was founded nearly 50 years ago, and today it’s one of the largest social service agencies in Canada. This past year, we served more than 73,000 people and provided 123,000 services. We offer a wide range of integrated programs and services for newcomers, including settlement, English-language training, employment and entrepreneurship, and community, family, youth and seniors programs. We also operate more than 900 affordable housing units across the Lower Mainland and provide assisted living and long-term care to house seniors through our Multi-Level Care Society.

Given our areas of focus, I would like to share my views on the importance of federal investment in settlement services for newcomers as well as funding for affordable housing and seniors care.

We all know that immigrants to Canada are the engine of our economy. They are even more important in a labour shortage, with a record high of more than one million jobs unfilled across the country and an unemployment-to-job vacancy ratio in Canada at a historic low. We need to continue to increase the number of immigrants we welcome in order to reduce labour and skill shortages as our own aging workers retire at an increasing rate postpandemic.

To address that, last year, Immigration, Refugees and Citizenship Canada set a historic record by admitting more than 405,000 new permanent residents to Canada and is on target to welcoming 431,000 by the end of this year. These newcomers need wraparound supports upon arrival to ensure they are able to swiftly settle, find a home and find a job. I would encourage the government to invest in critical services for newcomers, such as language, employment and entrepreneurship training, settlement supports and community programming, to ensure that they can enter the workforce smoothly. Targeted programs to help foreign-trained professionals overcome barriers to practise in Canada are also crucial, as well as work permit and residency pathways for temporary foreign workers and international students.

We all know that one of the biggest barriers to settlement for newcomers is finding an affordable home, especially in our larger cities. In the greater Vancouver area, it is nearly impossible for the average family to buy a home. The current benchmark price to purchase an apartment is more than $725,000, and the average rent for a one-bedroom apartment in greater Vancouver is more than $2,100.

We need a deep federal commitment to build up our affordable housing stock, and we need federal, provincial and municipal business and non-profit partners at the table together to find innovative solutions and to expedite zoning, permitting and development processes. An example on the local level is our operation welcome home pilot project with Rennie & Associates Realty. We are partnering to identify vacant homes pending redevelopment that can be occupied on a short-term basis to help settle Ukrainian arrivals and their families.

As we plan to accommodate workers and families, we need to be looking at the impact of the “grey wave” and planning to better address the coming care needs of Canadian seniors. There are now more than seven million Canadians aged 65 and older, accounting for 19% of our population. Statistics Canada estimates that by 2051, almost one-quarter of our population, or 12 million people, will be seniors. To accommodate this enormous shift, we need to reimagine what quality senior care looks like in the community. That means we need to find more ways to support healthy seniors to age better at home.

For example, we recently launched an integrated community services for seniors pilot project in partnership with Vancouver Coastal Health in B.C., which pairs ethnic seniors who need extra help to live independently with community connectors who refer them to support services, providing them with rapport and mental health support. In long-term care and assisted living facilities, we need to provide culturally appropriate quality services. This requires expert, well-trained and well-compensated staff. Given the severe shortage of health care staff, it is critical that we look at long-term care standards and work towards better wage parity for those roles.

Thank you so much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Choo, for those opening remarks.

We have an excellent group of witnesses here today with us.

We have about an hour and 20 minutes or so for questions, so let's get on with it really quickly. I know that members will have many questions.

For our witnesses, in our first round, each party will have up to six minutes to ask questions. We will be starting with the Conservatives.

We'll have MP Morantz for six minutes, please.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Mr. Kelly, I will start with you.

I found your opening remarks quite dire. You talk about the position that small businesses find themselves in, and really, your sad plea to this government is to not make it worse, yet that's exactly what they are doing.

One of the things that jumped out at me when I read your brief was that you said not to make it worse. First, let me backtrack, because I have to get this in. Your brief talks about putting a freeze on the carbon tax, but of course we know that the government plans to triple, triple, triple the carbon tax. This is my first time saying that on the record, so I had to get my shot in.

To be fair, your brief says, on a finer point, that the carbon tax backstop in backstop provinces is unfair to small businesses, as they contribute almost 50% of the carbon backstop revenues but don't qualify for the significant rebate schemes offered to citizens in the provinces that are affected. You go on to recommend that the carbon backstop be overhauled to provide small firms a rebate scheme that reflects their contribution to the carbon tax.

I have to admit that this point about how the carbon tax is structured has troubled me for a long time, in that it seems inequitable that small businesses don't get the rebate. Could you extrapolate on your policy considerations around that?

[Daniel Kelly]

Sure.

Look, small firms have mixed views on carbon taxes in general. Some support them in some provinces. In fact, more small businesses support than oppose them.

I would say that on average, though, if we're looking at our membership as a whole, there is opposition to a carbon tax in the way that it's currently structured. Even those who like the concept of a carbon tax, as our surveys show, hate the way it is being administered by Ottawa in the four provinces to which it applies right now, which we're worried may soon become six provinces, if rumours are correct. That is because for the carbon tax revenue, the only reason that some consumers are said to receive more money back than they actually pay in a self-funded program is that there are other consumers who get none or very little back from the carbon taxes they pay, and the largest group within that sector is small and medium-sized businesses.

The government did, to its credit, say that there would be some programs set up to provide some funding back to small firms to offset their costs from carbon taxes. If you can believe it, they allocated.... Even though small and medium-sized firms pay close to 50% of the carbon tax, 7% of the rebates were designed for small and medium-sized firms. Most damning of all, the 7% that was supposed to come back to small and medium-sized businesses never happened. Ottawa could not construct the programs. They fumbled the ball almost entirely, so virtually nothing has come back to small and medium-sized firms over the course of the previous rounds of the carbon tax.

It's one of the reasons why we're so worried about the dramatic increase. We haven't got the revenue shift correct, and that's putting huge pressure on small and medium-sized firms. It's one of the reasons why the tax as it's constructed is so detested.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Along that same line of the “don't make it worse” argument, there are also other tax increases planned, which you pointed out, for EI and CPP and for what we're calling the “paycheque taxes”. There's the excise tax, which is going to make the price of beer, of all things, go up by about 6% next spring. That's sacrilege in Canada.

I wonder if you could comment on these things. Your plea to the government is very simple: Just don't make it worse and leave things as they are. It seems to be falling on deaf ears. I'm wondering if you could elaborate a bit further.

When you also pile onto that the cost of interest rates and inflation, or the inflation tax, all of these things seem to be a perfect storm that can only serve to hurt small businesses. These arguments seem to be falling on deaf ears when it comes to the government today.

[Daniel Kelly]

On the Canada pension plan, I will tell you that the previous tax increases have hurt us hard, and there was no stopping that during the pandemic itself. On EI, the federal government, to its credit, froze EI premiums for 2020 and 2021. They've now taken that freeze off, so rates are going up by five cents per $100 for employees and seven cents per $100 for employers.

Get a load of this: On the CPP front, somebody making $65,000 is going to see a $750 increase in their CPP contributions next year on January 1. That's $750 out of their pocket. The employer is going to have to come up with another $750 for an employee making that. When you're dealing with inflation as a business or consumer and taking $750 out of your income, even if you accept that the CPP should go up, could we not...?

The benefits get phased in over the next 40 years. A one-year pause to get inflation under control does not seem like too tall a request for Ottawa at this time.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Kelly. Those were my questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz.

We're now moving to the Liberals for six minutes. I have MP Chatel.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

I will go directly to Mr. Currie and Mr. Ross.

The OECD report “Reforming Agricultural Policies for Climate Change Mitigation” has a series of recommendations about how we should invest more in helping farmers transition towards more sustainable agriculture. They talk about having more direct support for farmers to invest in innovative technology and new fertilizers, and address issues such as climate mitigation. We know water is going to be an issue for agriculture—for vegetables and grains, but also for cattle if they don't have enough water and are experiencing intense heat waves.

Can you talk more precisely about how the new partnership is a move forward in that direction—because we have programs that will provide direct support—and what more we can do within that frame?

[Keith Currie]

Thank you very much for the question.

I'll address it from a farmer's perspective, and then I'll turn it over to Scott because he is the brains behind the organization. This is his bailiwick, so to speak.

Certainly, we agree with that report on the aspect of investing in Canadian farmers and, more specifically, in technology. We feel that's how we're going to see some serious gains in our climate change initiatives. We've been asking for that for some time. A limiting factor for us right now with respect to the hardware type of technology is connectivity in rural Canada. The better we get connectivity moving at a faster pace and can get us all connected, the sooner we can take advantage of the technologies that are not only here now but also, as we know, coming down the pipeline.

This is also for technologies like seed genetics, for example. Better and more research in seed genetics would help us with both drought-tolerant crops and crops that may be under stress from excess rain, because we are seeing severe weather swings.

We can work with the government to tailor those needs towards technological advancements, but we also need to keep in mind that it can't be one size fits all. Canada is a large country with large regional and geographic weather differences. Making sure we make these types of technologies available to everyone to fit their needs is important.

I'll turn it over to Scott to add to that.

[Scott Ross, Executive Director, Canadian Federation of Agriculture]

With regard to your question about the sustainable Canadian agricultural partnership, we certainly view it as a step in the right direction. We're still waiting on details of the resilient agricultural landscape program, but it's very much in line, from our understanding to date, with our interest in seeing direct support made available to farmers for adoption of environmental best management practices.

I would say, as Keith alluded to, that one of the critical parts of this entire discussion for us is the engagement with farmers themselves early in the policy development process, and making sure that when we are designing programs and policies, we have a working group that brings farmer voices to the table early in that process so that programming actually meets the practical realities of farmers on the ground.

I would also say—and there were a few references to this already—that additional funding for extension and knowledge transfer would help ensure that the right information is getting to farmers on the ground around emerging technologies, and that they have the support available to adopt them. In many respects, there are programs in place. It's a question of cost-sharing thresholds and how much is required from a capital standpoint. As we heard from many today, SMEs are struggling with pressures around available capital due to the rising cost of production, and that's a real critical concern.

I'll conclude with a point on the importance of direct on-farm measurement of emissions. As a future direction, we would very much like to see further support directed toward that. One of the challenges we see, whether it's in carbon pricing or other emissions reduction measures, is the inability to truly capture what's happening on a farm. Modelling can only go so far, and you're limited by the data you can collect. There are emerging technologies for measuring these things on farm that can be far more accurate and can provide a much more nuanced and, to Keith's point, regionally variable approach to supporting emissions reductions.