Government Operations Committee on May 4th, 2020

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you very much.

My questions are going to be directed to Finance.

I have a lot of small and medium-sized enterprises that are not eligible to access the CEBA because they issued T4As rather than T4s. When I look at the CRA definition of income, T4s, T4As, T5s, all become income.

Could you give me the logic behind why these guys cannot access the CEBA, number one?

Number two, some sole proprietorships or enterprises are giving themselves dividends. Even if they give themselves $20,000 worth of dividends, they don't qualify for the CEBA. If you could give me some of the logic behind it, I'd really appreciate it.

Thanks.

[Leah Anderson]

Since we launched CEBA, we've been taking a good look at it and it is based on payroll. Since we launched CEBA we have expanded the range of entities that are able to apply, from $20,000 up to $1.5 million in payroll.

We are very aware of the issue you raised, that some did not qualify, and we are taking a very close look at that to see what additional supports are appropriate for those circumstances.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

If they issue a T4A, it is income, so what do I tell them? Should I tell them that you're taking a look at it, or what?

[Leah Anderson]

We are closely assessing the issue. We're aware of the concerns and are trying to make the benefit available to the widest range of small businesses that have these kinds of fixed costs and need the extra support.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Okay.

My second question regards the rent relief. How is it working with the provinces? I ask because certain small landlords don't have any mortgages and don't think they should take advantage of this commercial rent relief, so they don't give relief to their tenants. What should we do about it? How do I convince my businesses to stay open or to take advantage of this when the landlord is probably not willing to take advantage of it?

[Leah Anderson]

Since the Prime Minister announced the measure in late April, CMHC came up with further details on their website last week. They have indicated on it that if a landlord does not have a mortgage, they should contact CMHC to go through a different mechanism. We are working on an alternative mechanism for those who do not have mortgages.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

What is the province doing about those who have mortgages, but do not wish to participate?

If we want to kickstart the economy, we know that we need to keep these businesses alive and well, and these are small proprietors like acupuncturists or massage therapists, a whole plethora of these businesses. Is there any understanding we can give to these businesses to say, here is something you can look at? I tell them to negotiate with their landlord, but it's beyond federal control.

[Leah Anderson]

The federal government is doing this program in partnership with the provinces. We cost shared 75%-25% with the provinces. As you said, it's very important for landlords and their tenants to work together to find appropriate solutions. This program will provide a real opportunity to provide the relief that tenants need at this time. It is directed to tenants who have had a 70% revenue decline—those who are most challenged in these circumstances.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Okay.

Now I come to the CERB. I have individuals, sole proprietors, who did not pay themselves any wages, and now with COVID-19 they probably cannot show $5,000 in employment income. What do they do? They have no income anymore.

[Leah Anderson]

I'll turn that question on CERB over to my colleague.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Okay.

[The Chair, Conservative, Tom Lukiwski]

Because we are completely out of time, I would ask, if you can, that you provide that answer to our committee members in writing. You can give that to our clerk so that we can distribute the response to all committee members.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you, Madame Ratansi.

We will now go to two-and-a-half-minute interventions, starting with Mr. Barsalou-Duval.

Mr. Barsalou-Duval.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you very much, Mr. Chair.

My first question is for the Department of Finance officials.

I've heard fairly frequently from seasonal workers who are afraid they won't be able to access employment insurance or the CERB this year. Changes have been made, but these workers are wondering about next year. If their work season doesn't happen, if they aren't able to pay into employment insurance or if they don't get enough hours of work to receive employment insurance benefits, does that mean they'll have to get through the winter without any other income?

That raises an important question. I want to know if the Department of Finance has thought about it and if it will come up with a solution soon.

[Suzy McDonald]

We're aware of this issue because we've heard about it from many stakeholders. It's an issue of concern to us. Our colleagues at Employment and Social Development Canada are looking at it as well.

We can give you a full answer later.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you.

My second question is also for the Department of Finance officials, but it has a public policy and taxation aspect to it.

When someone has an income of more than $1,000, they aren't entitled to the full CERB amount. Obviously, this measure was put in place to ensure that people don't just go to work a few hours in order to benefit from the CERB.

As the economy recovers and the lockdown ends, some people may refuse to go to work or may have little incentive to return to work. In some cases, employers won't need a full-time employee because the demand won't be great enough. Instead, the employer may be looking to hire a part-time employee.

Will changes be made to the CERB program to ensure that people don't lose everything?

We need to ensure that employers aren't understaffed and that programs put in place to help employees aren't detrimental to them.

[The Chair, Conservative, Tom Lukiwski]

Please give a very brief answer, if possible.

[Suzy McDonald]

We're looking into that situation. As far as the CERB is concerned, we're hearing about what's working and what isn't working so well. We're always reviewing the programs in order to improve them.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Green, the floor is yours.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Mr. Chair.

We've heard quite compellingly that there has been work with provinces and a 25%-75% split for commercial small business rent relief. If we can work with the provinces to figure that out for small businesses, why wasn't this extended to renters in the residential market?

This is for the Department of Finance or whoever answered the question around—

[Leah Anderson]

I can take that one.

Generally speaking, rent is an area of provincial jurisdiction. I think the first question asked what the provinces are doing. Many provinces have taken steps to provide rent relief for residential tenants. For example, in British Columbia there is quite an extensive program, and others have one as well.

In this area for small businesses, given some of the greater systemic impacts, the Government of Canada made a decision to enter into this partnership to fill a bit of the gap.

[Matthew Green, NDP, Hamilton Centre, ON]

That being said, we're hearing from municipalities. I'm a former city councillor. There are infrastructure projects across the country that are split a third-a third-a third.

Would the federal government be willing to assume all construction costs for any infrastructure that relates to stimulus funding as we transition out of COVID and look to reopen and restart the economy?

[Leah Anderson]

I'll turn that one over to my colleague, Evelyn, but I think it's very early to say what we will do in a recovery. We are certainly looking at all options to restart on a solid footing.

Over to you, Evelyn.

[Evelyn Dancey, Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance]

That is exactly the answer I would have given. Certainly, infrastructure is one of the tried and tested stimulus levers. At an appropriate time we would be turning our minds to such things that have worked in the past to stimulate the economy, but we really still need to see our way through the current stabilization and restart activities.