Evidence of meeting #9 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mclean.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Philippe Méla  Legislative Clerk
Clerk of the Committee  Mr. Alexandre Roger
Trevor McGowan  Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
Maximilian Baylor  Senior Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Benoit Cadieux  Director, Special Benefits, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development

6:40 p.m.

The Clerk of the Committee Mr. Alexandre Roger

Shall the ruling of the chair be sustained?

(Ruling of the chair sustained: yeas 6; nays 5)

6:40 p.m.

Liberal

The Chair Liberal Peter Fonseca

Just to let members know, including Mr. Blaikie, because the ruling of the chair was upheld, that also applies as far as my ruling on amendment NDP-2 goes.

(On clause 1)

That takes us now to clause 1, and any amendments to clause 1.

Mr. Blaikie, would you like to speak to NDP-3?

6:40 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

This amendment and its sister amendment, NDP-4, are with a view to an issue that has come up again and again in respect of the wage subsidy, which is that a number of companies availed themselves of wage subsidy support but clearly didn't need it because they were paying massive dividends to their shareholders. We've seen the clawback of benefits from people on the financial margins, but these companies that were clearly in a position to reward their shareholders have not seen any kind of comparable effort or in fact any effort at all to recover public funds that they took and didn't need.

The point of these amendments is to ensure that there is an effort to recover money that went to companies that clearly didn't need that public support and that going forward there doesn't continue to be this phenomenon of companies being able to access funds, make a profit, and then pay those public funds out to their shareholders rather than reimbursing them to the government.

The mechanism is a lot like what was landed on with respect to executive compensation, but it would apply in this case to dividends as well. The proposal here is that it would apply retroactively to the beginning of the pandemic and the paying out of these benefits.

6:40 p.m.

Liberal

The Chair Liberal Peter Fonseca

Is there further discussion?

Mr. Chambers, go ahead.

6:45 p.m.

Conservative

Adam Chambers Conservative Simcoe North, ON

I have a question for my colleague and perhaps for the drafters to clarify. Is the restriction that you did not pay dividends during the period of time for which you received the support, or is it that you did not pay dividends for the entire period starting in March until now?

6:45 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

As I said, they're similar to the executive compensation amounts, except that they go backwards. My understanding for executive compensation is that any amount that was payed out in executive compensation from the go-forward date would be repaid to government from the amount they took in wage subsidy.

The idea is that it would be happening on a go-forward basis. If you received a certain amount, call it x, and then you payed out an executive compensation amount y, you would be paying that back to the government because it was obviously something that wasn't required in your budget.

The idea is that this would be true for dividends on a go-forward basis but that we would also go backwards and say that if you were able to pay out $100,000,000 in dividends to your shareholders, that was $100,000,000 of wage subsidy that you did not require. That would mean that they would have to find that money elsewhere, either in cash holdings or in the market. It's our opinion that companies that were able to pay out that kind of dividend in these circumstances will be able to find a way to pay that money back and therefore don't need to continue to benefit from public funds in that amount.

6:45 p.m.

Liberal

The Chair Liberal Peter Fonseca

Mr. McLean would like to speak to this.

6:45 p.m.

Conservative

Greg McLean Conservative Calgary Centre, AB

With respect to trying to support the amendment here, if I can, I'll ask Mr. Blaikie this. There are certain entities, of course, that required funding under CEWS to keep their employees during a period when there was no income coming in, and that have subsequently obviously turned their fortunes around but would not have survived had they not had the support from government during a very trying time at the beginning of the pandemic.

If the intent is only to use it on a go-forward basis when companies were solvent and still may have been trying to access government programs, I think that intent is clear, and I think it's clearly supportable, but if those programs had not been there at a certain point in time, those companies would not exist now and we'd be more beholden to foreign companies doing that work.

If we can clarify that in the language and in the intent, I think you'd get a good amount of support from around the table.

6:45 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

Sure. I think it is true that those companies did need that assistance at a particular time in the pandemic. It's not about when they paid the dividends. They paid the dividends once they had come out on the other side. Those companies are now out on the other side, so I think they're very likely in a position to repay, even if that means getting some kind of financing in the market in the meantime in order to make taxpayers whole for some of the amount they didn't need.

Of course, this amendment doesn't cover share buybacks. That was something we looked at, but that was a complicated legislative amendment. It wasn't something that House drafters were able to do under the time constraints we had. Anyway, there were a number of questions about how that would be implemented. This is what we could develop for now. I mention this simply because there were other indications, like share buybacks, that those companies didn't need that money and that public money was used for other purposes. This doesn't reclaim that. Seeing as dividends are only a portion of what some of these companies were able to do with taxpayers' money, I think it's reasonable to ask that they repay that money.

I think of the Royal Ottawa Golf Club, for instance. There was some media coverage of them. They received about a million dollars in wage subsidy money, if memory serves—it may not be a million, but the article is out there—and they ended up with about the same in a windfall. They decided to repave their parking lot three years ahead of the plan in their capital plan. To me, that's pretty obvious. Even though they needed that money in the early months of the pandemic, they received that money and then had a pretty good season. Then they would be in a position to repay that money. That's why I think this isn't a lot to ask in terms of retroactivity.

Again, in keeping with the spirit of some of my comments from the last day, I recognize that one vote is not enough to pass an amendment at committee. If this could garner majority support by removing the retroactivity piece—well, I think that would be too bad—I would rather see the protection exist on a go-forward basis than not exist at all.

I am disappointed that the government, as I mentioned to the minister when she was here, didn't avail itself of the opportunity to put those kinds of protections in here, not just around dividends but also around share buybacks. These kinds of things are always much easier when the government is willing to do some of that homework. We're sharing a small drafting unit among 338 MPs, while the government has departments with inside legal counsel that can do a lot of their drafting. Some of these issues are complex, there's no question about it, but I just don't think that's an excuse for inaction.

I would like to see something productive come out of tonight's meeting that would at least shield Canadians against future instances of the kind of grab of taxpayers' money that we saw under the wage subsidy program, totally recognizing that.... I mean, look, a lot of this money was legitimately used. I'm not trying to say that there weren't a lot of companies that availed themselves quite rightly of the wage subsidy program. We were early advocates for that program. When the government announced the 10% wage subsidy program, we teamed up with the CFIB, not usually best friends of New Democrats, in order to call for a 75% wage subsidy, but all along, we also called for protections to make sure that this money wasn't going to be received by companies that were ultimately going to do well and then have no mechanism for getting it back.

This is at least trying to shoehorn that in there. We didn't have normal committee processes in the early days of Parliament, so there wasn't an opportunity for a party to independently bring an amendment in the way I am doing now. As I said, I'm interested in making more progress rather than less, recognizing that I can't do that as an individual member of the committee.

Certainly, if you have a concrete proposal for how we might make this amendment more palatable to a majority of committee members, I'm all ears.

6:50 p.m.

Liberal

The Chair Liberal Peter Fonseca

I am being cognizant of time. We are nine minutes from the vote. I have Mr. Beech and Mr. McLean.

Mr. Beech, go ahead.

6:50 p.m.

Liberal

Terry Beech Liberal Burnaby North—Seymour, BC

Thank you, Mr. Chair.

I seek your guidance. I'm prepared to speak to NDP-3. I'm also prepared to speak to NDP-4. The conversation has kind of been about both. I presume I am speaking only to NDP-3 at this time.

6:50 p.m.

Liberal

The Chair Liberal Peter Fonseca

I apologize, Mr. Beech. I was just checking on the time for the vote. We're seven minutes from the vote.

I think at this time we're going to suspend so that we can get up to our vote, and then we will be back.

Thank you.

7:20 p.m.

Liberal

The Chair Liberal Peter Fonseca

I call the meeting back to order. We were last discussing NDP-3. On the speakers list, I had Mr. Beech and Mr. Chambers, and then Mr. McLean, I think, would like to speak again.

Mr. Beech, go ahead.

7:20 p.m.

Liberal

Terry Beech Liberal Burnaby North—Seymour, BC

Thank you, Mr. Chair.

Just before we departed for the vote, I was seeking your clarification. There has been talk around both NDP-3 and NDP-4. I am prepared to speak to both of them. I seek your guidance as to whether I should speak to NDP-3 and hold off on speaking to NDP-4 or whether I should address both at this time.

7:20 p.m.

Liberal

The Chair Liberal Peter Fonseca

According to the legislative clerk, Philippe, it should be just number three.

7:20 p.m.

Liberal

Terry Beech Liberal Burnaby North—Seymour, BC

Okay.

This motion, as intended, makes the executive compensation provisions, which are now in place, retroactive to March 15, 2020 for the emergency wage subsidy. Some concerns around that have been reflected by some other members around this table.

The first and most obvious concern is the substantial legal risk that the government would incur by changing the terms of the program after it has already been accessed by Canadian companies. Notably, at the time when companies were making these decisions, they would have done so following the rules that existed at the time. While this provision is a good one and the government obviously agrees with it in principle—that's why we implemented the executive compensation provisions in the first place—retroactive amendments really should only be made in extremely exceptional circumstances. Those could be a long-standing interpretation of law, clarity of a policy that is unclear from previous relevant provisions, or maybe a change that corrects an ambiguous or deficient provision.

In addition to this overarching principle with regard to retroactivity, there are also a substantial number of technical deficiencies within the proposal, which would likely require more time to work through than we have provided for in this meeting. The tightness of the timing of this bill is regrettable, but I think we all understand the importance of getting these supports and making them available to Canadians before the House rises.

For these reasons, I would encourage members to vote against this amendment. Thank you, Mr. Chair.

7:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Beech.

We have Mr. Chambers, and then Mr. McLean.

7:25 p.m.

Conservative

Adam Chambers Conservative Simcoe North, ON

Thank you, Mr. Chair.

Yes, it is unique to ask folks to retroactively repay a benefit that we don't believe—or some of us don't believe—they should have received. That's exactly why it's appropriate. Frankly, it's unconscionable that the government subsidized the share prices of a lot of publicly traded corporations by letting them unfairly access the wage subsidy when they had financial capacity to continue paying dividends, repurchase shares and increase executive compensation.

With that being said, I think it would be entirely appropriate to consider moving away from retroactivity if we could get agreement on a go-forward basis. I think that is something that would be very amenable, certainly to our side. I believe my colleague will speak to a potential amendment at this point.

Thank you, Mr. Chair.

7:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Chambers.

Mr. McLean, go ahead.

December 13th, 2021 / 7:25 p.m.

Conservative

Greg McLean Conservative Calgary Centre, AB

Thank you, Mr. Chair.

Thank you, Mr. Chambers.

I propose that we strike out the last part, the second part of the amendment here to Bill C-2, NDP-3, paragraph (b). We could strike that out because there is a problem with retroactivity. If we took out the retroactive clause there, “Subsection (18.1) is deemed to have come into force on March 15, 2020”, I would propose that to my colleague from the New Democratic Party. I think the intent of that would be clear, that companies cannot access the benefits if they are paying dividends or increasing the payouts to their executives.

We would like to have language in there that includes share buybacks as well, because it's all about income distribution one way or another and access to these programs should not be benefiting shareholders at the expense of taxpayers. I think we all agree on that. I think it's a flaw in the initial bill that went through that we have this. Nevertheless, there are companies that followed the rules and applied those rules to make sure they survived that period. Retroactively.... The programs were not loans at that point in time. The programs were, “Here's a program to make sure you hang on to your employees and that your employees have the sustenance required.” Some of those companies have since emerged as dividend-paying companies.

I want to make sure that the timing on this is very clear, that we're talking about the go-forward plan, with no retroactive element involved in this that would require all kinds of financial restatements and all kinds of public market shenanigans that would happen at that point in time. I do appreciate very much the intent of the bill as far as matching revenues with expenses goes.

Thank you, Mr. Chair. I would propose that as a friendly amendment.

7:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

Is there further discussion on the amendment?

7:25 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

I am prepared to accept having that amendment moved. I think that normally you need permission from the person presenting the amendment to have an amendment moved, which is particularly important in majority government situations, where government majorities on committee might otherwise hollow out opposition amendments, but I'm quite happy to offer that permission so that we might come to a mutually agreeable solution in respect to this amendment.

7:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

Mr. Blaikie, we would have to vote on the amendment to your NDP-3.

I have Ms. Dzerowicz.

7:30 p.m.

Liberal

Julie Dzerowicz Liberal Davenport, ON

I'm sorry, Mr. Chair, but could we just go through that amendment again? I want to make sure we're clear on what is being proposed.

7:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

Mr. Clerk, have you received it?

We have not received it. Mr. McLean, we would need to receive that. One of the members, Ms. Dzerowicz, would like to go through the amendment to NDP-3, the subamendment to the amendment.