The Standing Senate Committee on National Finance met by videoconference this day at 2:30 p.m. [ET] to study: a) certain elements of Bill C-13, An Act respecting certain measures in response to COVID-19; b) the provisions and operations of Bill C-14, a second Act respecting measures in response to COVID-19; and c) the government’s response to the COVID-19 pandemic and its economic consequences; and, in camera, to consider a draft agenda (future business).
Senator Percy Mockler (Chair) in the chair.
The Chair: Before we begin, honourable senators, I would like to remind senators and witnesses to please keep your microphones muted at all times unless recognized by name by the chair. We will now begin with the official portion of our meeting.
Honourable senators, my name is Percy Mockler, senator from New Brunswick. As chair of the committee, I would like to introduce the members of the committee who are participating in this meeting: Senator Forest, deputy chair; Senator Richards, steering committee member; Senator Boehm; Senator Dagenais; Senator Deacon (Ontario); Senator Duncan; Senator Galvez; Senator Harder; Senator Klyne; Senator Loffreda; Senator Marshall; Senator Smith; Senator Gagné; and Senator Martin.
Welcome everyone and welcome to all the Canadians who are watching today.
Our committee is continuing its study of certain elements of Bill C-13, the provisions and operations of Bill C-14, and the government’s response to the COVID-19 pandemic and its economic consequences, as per the April 11 order of reference from the Senate of Canada.
Again, honourable senators, as chair, with our collective experience, I will be asking for your constant support and cooperation.
Honourable senators, for our first panel today we welcome, from the Canadian Alliance of Student Associations, Bryn de Chastelain, Board Chair. We also welcome, as an individual, Dr. Evelyn Forget, Professor, University of Manitoba.
Finally, we welcome Pierre Céré, spokesperson for the Conseil national des chômeurs et chômeuses.
To the witnesses, thank you very much for accepting our invitation and sharing your opinions, comments and recommendations with us.
We will now hear comments from Mr. de Chastelain. The floor is yours, please, for your comments.
Bryn de Chastelain, Board Chair, Canadian Alliance of Student Associations: Good afternoon, Mr. Chair, fellow esteemed committee members and fellow witnesses. I would like to begin my statement by acknowledging that I speak to you today from Mi’kma’ki, the ancestral and unceded territory of the Mi’kmaq people.
My name is Bryn de Chastelain, and I am chair of the Canadian Alliance of Student Associations, or CASA. I am also president of the St. Mary’s University Students’ Association, and a fourth-year student pursuing a Bachelor of Arts degree with a double major in political science and economics.
CASA is a non-partisan, not-for-profit organization that represents over 275,000 students at colleges, polytechniques and universities from coast to coast. Through a formal partnership with the Union étudiante du Québec, we are a trusted national student voice.
CASA has been at the forefront of student advocacy efforts throughout the COVID-19 pandemic. We have been clear that students, like other Canadians, have been hit hard by the pandemic’s economic and social impacts. At a uniquely vulnerable point in our lives, students have been blindsided by lost income, online classes, a summer of isolation and bleak job prospects following graduation.
Thankfully, on April 22, the federal government responded to our calls for support with a generous and significant student aid package. As a student leader, I would like to express my gratitude for this immediate and considerable support that was extraordinarily necessary in these unprecedented times.
Many students are now seeing immediate support from either the Canada Emergency Response Benefit or the Canada Emergency Student Benefit, which together are providing an irreplaceable stopgap for students. These benefits are helping students keep food on the table and a roof over their heads, and we thank you for that.
I would also like to highlight the generous additions to both Canada Student Grants and Canada Student Loans that were also announced on April 22. These improvements will help ensure that many students in Canada can continue to access and afford their education, despite COVID-19-related hardship. These supports are welcomed by students across Canada, but not everybody has access to them.
I would particularly like to highlight the lack of support available for international students during this quarantine period. As it stands, international students are ineligible for the Canada Emergency Student Benefit, meaning that those who have made less than $5,000 in the past year are left without access to desperately needed assistance.
The Canada Emergency Response Benefit is available to international students, but the Canada Emergency Student Benefit is not, and we see that as fundamentally unfair. Many international students cannot work while in school, and have lost the opportunity to do so over the summer. They need support, and we’re asking the federal government to leave no student in Canada behind.
Despite this gap surrounding international students, CASA is strongly supportive of the federal government’s overall student aid efforts thus far. Looking forward, however, we at CASA are hearing that students are still very worried about their finances, their health, as well as the quality and accessibility of the upcoming digital semester.
According to a recent poll we have commissioned at CASA, 77% of students in Canada report being considerably stressed by the ongoing COVID-19 pandemic. We are stressed about what the pandemic means for our futures, about the health of our loved ones and about finding employment after graduation.
Students are reporting significant financial hardship, despite the relief provided by the CERB and the CESB; 43% say they will be relying more on government loans to pay for the upcoming school year, and 59% say they are just as worried about covering their living expenses in January as they are today.
Students are seeing real financial hardship on the horizon, and that’s why CASA is calling on the government to consider additional support for students beyond September 2020. Specifically, we are asking the government to extend the six-month interest-free moratorium on student loan payments past September 30, 2020.
Now, beyond financial concerns, CASA is also hearing that many students are second-guessing whether school in the fall is even worth it, given the less-than-ideal digital environment. Our data tells us that 39% of students have considered or have already deferred their fall semester. Along with this, 31% have also considered or have already switched from full-time to part-time studies. Students are rightly worried about the quality and accessibility of online education in the fall. We think there is more the federal government can do to ensure that our next semester is a success.
In the 2019 election, the Liberals promised to ensure that every Canadian will have access to high-speed internet by 2030. CASA urges the federal government to accelerate this timeline and move forward with immediate steps to ensure that all post-secondary students have adequate access to reliable and high-speed internet in time for school this fall. Along with that, we know that success in a digital classroom hinges on having the suitable technology. That’s why we’re also calling on the federal government to ensure that all students have sufficient access to digital technology. Specifically, we’re asking the government to commit additional funding to provide appropriate digital technology to any low-income student who needs it.
With that, I would like to thank the committee once again for the invitation to speak and represent the voice of Canadian students. I look forward to answering any questions you might have.
The Chair: Thank you. Now we will move to Dr. Forget.
Dr. Evelyn Forget, Professor, University of Manitoba (as an individual): Thank you very much for giving me the opportunity to speak to you today. I’d like to use the time I have to talk about the Canada Emergency Response Benefit that has been so important to ensuring Canadians have access to the supports they needed during the pandemic lockdown. This is a timely conversation, because revisions to the CERB are currently being negotiated and we have an obligation to get this right.
The CERB was introduced as a temporary benefit, and it was scheduled to be eliminated as the economy began to reopen and jobs began to reappear. As some of the first beneficiaries are nearing the end of their four-month entitlement, as the benefit is beginning to reach its planned expiry date, we now face three options. First of all, we can stop the CERB and transition everyone on to Employment Insurance or other programs; we can retain the CERB as it is and extend it; or we can retain the CERB with adjustments.
I would like to argue that it’s the third option we should be pursuing. We should retain the CERB and transform it into a benefit that is more consistent with reopening the economy.
The Labour Force Survey numbers that were just released last week showed that there was an unexpectedly large number of new jobs in April, but many Canadians were still not working or were working reduced hours. The official unemployment rate was 15%, but if you adjust that rate taking into account workers who have lost their jobs and are no longer looking for work, or workers who are working reduced hours but would like to work full time, the effective unemployment rate is much closer to 25%.
As the economy begins to reopen, more and more workers are starting to go back to work, but recovery has not been uniform. Women in particular, who work disproportionately in the hospitality sector and in retail, and who shoulder much of the additional child care responsibility created by the elementary school closures, have not returned to their jobs as quickly as men.
Even though parts of the economy are recovering, we know that some firms are not going to survive this shutdown. Some of the federal supports will prolong their demise, but closures are inevitable. The retail sector, in particular, is likely to be especially hard hit.
Therefore, some kind of support for working people will continue to be necessary beyond the planned end of the CERB. If we try to end the CERB and transition unemployed people, their first move will be to apply to Employment Insurance. When they do that, many are going to find that Employment Insurance is going to offer them very little support.
We know that Employment Insurance doesn’t support the self-employed very well. We know that the payment received depends on previous work history, and gig workers in particular, part-time workers and workers in retail and hospitality very often haven’t accrued the work history necessary to qualify. Even those who do qualify often receive very low benefits. Employment Insurance offers temporary benefits. Depending on where in the country you live, support is available for as little as 14 weeks. We know that this recovery is going to require a more flexible period of support.
Most importantly, EI has no provision for parents who stay home because the schools or daycares are closed. If we face ongoing shutdowns because of this pandemic, these parents are going to require support. EI has no provision for workers who stay home because their employers cannot provide a safe environment or because they are immune-compromised or live with someone who is.
We know that in ordinary times, fewer than 40% of workers actually qualify for EI, and these are not ordinary times. Workers who can’t access EI will have no choice but to apply for provincial income assistance, provincial welfare — an inadequate, stigmatized program of last resort. This upsurge in applicants is not something that very many of the provinces can absorb during this period of increased costs and reduced revenues.
The second option would be to keep the CERB as is and to extend it. However, the CERB has design flaws that limit its usefulness as the economy reopens. One of the real limitations is that CERB recipients can only earn $1,000 before they lose their entire benefit. As firms begin to reopen, most are not in any position to guarantee workers a minimum number of hours or minimum earnings. Therefore, potential workers are put in a position where they might go back to work, earn slightly more than $1,000, lose access to the CERB, but less than the $2,000 they would have received had they stayed home.
If the benefit were transformed so that it was gradually phased out as workers’ incomes increased, that problem would not exist, although there would still, of course, be other issues involved with reopening such as child care and the health risks of returning to work.
To me, this suggests we should be thinking about how to revise the CERB to make it more consistent with reopening the economy, to allow workers to keep a larger portion of their earnings, which would reduce the work disincentive. Now, Employment Insurance has a system we could easily borrow and modify for the CERB, a system that reduces the benefit by 50 cents for every dollar earned.
A second change we might consider is broadening the eligibility requirements to ensure that more people in need actually receive support. Many people who are most heavily affected by COVID-19 didn’t earn $5,000 in the previous year, so that expansion would make their lives much easier.
One of the changes under discussion right now is the imposition of penalties for people who knowingly make false statements when they applied for the CERB. While I think the problem of fraud has been overstated, I actually think this is a positive step forward. Penalties for intentional fraud are useful. One of the best aspects of the CERB is that money was delivered very quickly to recipients on the basis of their attestation, and issues of eligibility were sorted out after people’s lives had stabilized. This is a very humane way of delivering assistance, but clear penalties for intentional fraud may help us, in fact, to maintain that revolutionary way of delivering benefits.
The Chair: Dr. Forget, I’ll have to cut you off due to time, but we do have your presentation, so thank you very much.
I now recognize Mr. Céré, and thank you again for accepting our invitation.
Pierre Céré, Spokesperson, Conseil national des chômeurs et chômeuses: Honourable senators, thank you for inviting me to speak with you about the federal government’s emergency measures.
I’m the spokesperson for the Conseil national des chômeurs et chômeuses and I would like to focus more specifically on the income replacement measures for workers who lost their jobs as a result of the pandemic.
As you know, this pandemic caused major upheaval in the job market by throwing millions of people into unemployment all at once. This has been the worst economic shock in recent history, akin to the Great Depression of the 1930s.
Unemployment has only served to exacerbate the climate of anxiety created by the health crisis. As you know, income is central to the lives of individuals and families. They need their income to pay their bills, pay their rent or their mortgage, buy groceries and medication, and meet the needs of their families. At the beginning of the crisis, in mid-March, Service Canada and its employment insurance program were unable to cope with this shock. The online system was down, people could not get through on the phone and the offices were closed. Our community offices therefore began answering the questions of several thousand people who were bewildered by the government’s silence in the early days of the pandemic.
No one knew what type of income replacement measures would be implemented for a whole segment of the population that had just become unemployed, and that greatly exacerbated the climate of anxiety.
Things improved on March 25 with the announcement of the Canada Emergency Response Benefit or CERB and its adoption by Parliament. The general feeling was that people were beginning to feel reassured. The implementation of the CERB on April 6 and the rapid manner in which the payments were made reduced pressure on families.
According to the official figures, it is estimated that, to date, 8.4 million people have received the CERB, which represents 40% of Canada’s labour force.
Although this program provided broad coverage to both employees and self-employed workers who lost their jobs because of the COVID-19 crisis, it is important to remember that, in the beginning, there were some serious holes in this emergency social safety net. We took strong action several times to point out those flaws and our voices were heard, as were those of other sectors of civil society and the political world. As a result, on April 15, seasonal workers who were at the end of their benefits and who could not go back to their usual jobs were included in the protection provided by the CERB, as were others whose employment insurance benefits were running out. As mentioned earlier, on April 22, the government implemented the Canada Emergency Student Benefit. Many people heaved an enormous sigh of relief. It is important to ensure that no one is left behind.
I would now like to draw your attention to a few things. The first is factual in nature. The service that Service Canada provides to Canadians is still dysfunctional and largely insufficient. Its offices are closed, no one is answering the phone and the only way to contact the department is to fill out an online form to request a call back. These problems need to be resolved as quickly as possible because the files of thousands of claimants are stalled just because of this.
Second, in order for a government program to work, people need to be aware of and understand it. Obviously, there was no communications and advertising plan during the crisis.
Third, the crash is over, but the economic crisis is not and nor is the health crisis. The CERB will soon end and many people will be unable to immediately find work. Some employees will still be entitled to employment insurance, but others will not. Many people, such as self-employed workers, who represent 15% of the workforce, may end up without any income. Measures need to be adopted to extend the CERB. The debate has begun and we hope that the extension of the CERB will take effect in the coming days.
Fourth, we are witnessing a real smear campaign against CERB recipients and young people who are receiving the CERB for students. We heard the Premier of Quebec say that these people are being paid to stay at home and that the CERB is a disincentive to work. That is completely inappropriate in a world that is dealing with the current realities of a pandemic, a lack of job availability and an extremely high unemployment rate.
Finally, I would be remiss if I failed to remind senators that a crisis like this one could be the impetus we need to rethink the importance of our social benefits. It was the crisis in the 1930s that led to the creation of unemployment insurance. It was after the Second World War that we rethought our institutions and implemented the so-called welfare state, which involves programs that ensure social protection and a better redistribution of wealth.
The current crisis brought to light the problems with our programs, particularly our employment insurance program. This crisis should lead us to conduct a comprehensive review of this program. We do not yet know what the solutions are, but we need to think about it and come up with a modern response that is in line with the realities of our century, namely self-employment, telework, temporary work and the impact of the necessary environmental transition on the labour market.
As former Supreme Court justice Louise Arbour implied in a recent interview, the COVID-19 crisis may just be a dress rehearsal for the next big crisis, the climate crisis.
We have enormous challenges ahead of us and we need to be up to the task. We believe that the current government has the political and intellectual capacity needed to take on those challenges.
Thank you for your attention.
The Chair: Thank you, Mr. Céré.
On a note of information to all participants before we move to questions, our committee has received many written submissions with respect to the COVID-19 study by National Finance. These submissions will be taken into consideration in our studies.
We are now proceeding to questions. I would like to remind senators that you will have a maximum of three minutes each. Therefore, please ask your questions directly to the witnesses, and witnesses, please respond concisely. The clerk will make a hand signal to show that the time is over.
Senator Marshall: My question is for Mr. de Chastelain because I’m interested in the student financial assistance. As you said in your opening remarks, students are receiving significant financial support, the $9-billion COVID-19 program that was announced by the federal government, which included the Canada Emergency Student Benefit, the deferral of interest, et cetera. The Parliamentary Budget Officer issued a report this morning that said the Canada Emergency Student Benefit is estimated to cost $6 billion for just over a million students.
On the National Finance Committee we’ve studied the write-off of student loans and I believe last year, there was about half a billion dollars written off. We’re also waiting for the grants program to come. So as you say, there is significant financial support.
In your opening remarks, you indicated that the alliance is looking for additional support. Have you considered the possibility that the support being provided is going to be scaled back, and not only the COVID-19 support but even the pre-COVID-19 support? As the Finance Committee, we’re looking at the possibility of increased taxes, inflation and things of that nature. Have you looked at the other end of the spectrum — a decrease in the benefits that students are receiving now?
Mr. de Chastelain: Thank you, senator, for the question. In terms of student uncertainty, there is a tremendous amount of concern about what the environment is going to look like in the fall and beyond. Already we’re seeing a number of students, not only within our membership but beyond, who are reporting back that they think there will be a significant economic impact in our lives that goes beyond September, it goes beyond January and into the years ahead.
From the student perspective, there is a tremendous amount of concern about the future and our future economic impact of COVID-19. So in that regard, yes, there is definitely concern about programs being scaled back, but that said, there is more immediate concern about trying to pay tuition and pay for bills as we head into another semester in the fall and beyond.
Senator Marshall: For the students who are in these co-op programs, where you study a term and then you work a term, some of them must be very challenged now to find employment. Where do they go for assistance? Does your association help or are they on their own?
Mr. de Chastelain: We know that from mid-March until now, a number of students had either lost job prospects or are no longer able to find work at this time. One of the reasons programs like the CERB and the CESB have been so well received by the student body is because of the ability for students to be able to pay rent when they need to and to get by, in terms of their bills, while they’re still looking for work. In that regard, there is continued work that needs to be done but students are looking for options as well.
The Chair: Thank you, Mr. de Chastelain. If you want to add to the question of Senator Marshall, could you please respond in writing?
Senator Marshall: That would be helpful.
Senator Forest: Thank you for being here with us today to shed some light on these important issues.
My question is for Dr. Evelyn Forget. The establishment of a guaranteed minimum income program would surely have an opportunity cost. Regardless of how such a program would be funded, the money that would be invested in it would not be allocated to other types of programs. That is the gist of the argument that was recently put forward in Le Devoir by Sylvie Morel, a professor at Université Laval’s department of industrial relations, as well as by others who are opposed to the implementation of such a program.
How would you respond to this type of argument, Ms. Forget?
Dr. Forget: I didn’t actually speak about guaranteed minimum income, but some of the changes I’ve recommended to the CERB provide a platform for expansion in that particular direction.
I think there are no sensible proposals for a guaranteed livable income in Canada today that will do without public services. A guaranteed livable income would take many of the inconsistent monetary support programs that provide overlaps and gaps and transform them into a guaranteed livable income. I think everyone recognizes that money is important, but so too are public services, and all of the costing I’ve seen preserves public services.
Senator Richards: Thank you, witnesses, for being here today. I’m interested in everything that the witness has said, but I’m interested in the students as well.
Mr. de Chastelain, to the online questions, how restrictive do you think that is to learning? We’ve only had a limited amount of time to process it, but do you think teaching is capable of being done online? How long might it go on? There is no end date to this. It might go on for quite a while. Will students drop out because of it and feel that they’re not getting their due by doing it on Zoom or some other online method?
You mentioned international students. Do you know how many international students, for instance, are in Canada now? Are they all up against it? Are they all having a hard time because, of course, they’re away from home and away from means of employment? Perhaps you could update me on that. Thank you.
Mr. de Chastelain: Thank you, senator, for the questions. I’ll come to the most recent question first.
I don’t have the exact number of international students who are still in Canada at this time, but I would tell you that a majority of international students have been impacted by the COVID-19 pandemic. There are opportunities for them in terms of the Canada Emergency Response Benefit. However, what we are hoping to draw attention to today is that international students are not eligible for the Canada Emergency Student Benefit, which has left a gap for international students in terms of those who have not been able to receive assistance.
As to your earlier question, there is a tremendous amount of uncertainty for students right now when it comes to what virtual learning is going to look like. We know that only 64% of rural students have access to high-speed internet that would allow them to be learning effectively online. I’m one of the fortunate students to be studying here in Halifax, in an urban area where I have a reasonably strong internet connection. A huge concern for students right now is how are they going to be able to keep up with online classes if they don’t necessarily have sufficient digital infrastructure, including high-speed internet and access to digital devices in order to be able to study online?
Senator Harder: Thank you to all our witnesses. I’m going to follow up with Mr. de Chastelain, if I could, with respect to international students.
I certainly share your concern about that aspect of the foreign student population that is not covered by the student benefit and only covered by the CERB. My understanding is that a very significant number — probably around 300,000 — foreign students are presently in Canada, unable to return and also ineligible for assistance. One of the proposals I made in the Senate when we were debating the bill was that the proportionate amount, about $1.5 billion, would be provided to the student aid offices to provide assistance as they would deem appropriate to the population they are in charge of, in terms of the student aid, and that, of course, no foreign student should benefit greater than a Canadian student.
Has your organization, CASA, taken a position with respect to how assistance ought to be delivered to this population?
The second part of the question is that I think many Canadians do not appreciate the extent to which our foreign students’ tuition fees account for the well-being of universities, particularly so among a few universities that have higher-than-average foreign student attendance. I’m thinking of, for example, the University of Cape Breton, which will have a significant fiscal challenge should they not be able to receive the quantity of students at the levels that they have had in the past. Has CASA looked at that aspect of the challenge as well? Thank you.
Mr. de Chastelain: Thank you, senator, for the question. The first thing to understand here is that international students bring a tremendous amount of value to our post-secondary institutions; that is, the experiences that they bring into the classroom and the opportunity to have a more global education for domestic students as well.
In that regard, with the gap that we’ve identified in terms of international students who do not qualify for the student benefit and perhaps haven’t made enough in the previous year to qualify for the response benefit, the main concern we have is the speed at which students can begin to access that money. It would potentially be an option to have funds transferred to student aid offices for individual universities.
The real focus for students right now is how they’re going to be paying rent on the first day of each month, and how they will be able to keep up with grocery bills as well. Our interest at CASA is trying to ensure that students have access to that funding to be able to get them through the summer, to be able to keep themselves afloat during these challenging times before they think about coming back in September.
The Chair: Mr. de Chastelain, if you want to add to the questions that have been posed to you, please do so in writing.
Senator Dagenais: My first question is for Mr. de Chastelain.
Surely you are aware that many business owners criticized the government’s approach to student benefits. They believe that many students decided not to work because of the money the government was going to give them this summer. Do you have any idea how many students decided to abandon the labour market this year compared to usual?
Mr. de Chastelain: I’m not sure that I have a specific answer to the number of students. What I would say is that the student body across the country is still looking for work. Employment over the summer provides students with a number of benefits, nothing short of the money that we’re able to get but also the experiences that we’re able to have, whether it’s working with colleagues, learning from individuals in our field and adding valuable experience that really ties into what’s going on in the classroom.
For CASA, the value of the Canada Emergency Student Benefit provides students with the opportunity to pay their rent, to get by on their bills while still looking for employment. That’s definitely the goal for all students as we continue through the summer.
Senator Dagenais: My next question is for Mr. Céré. I would like you to answer the following question based on the discussions you’ve had with your members. It is obvious that the labour market will be transformed and that a return to normal does not necessarily mean that things will be like they were before the pandemic. To what extent will people who lost their jobs and who will not get them back be willing and able to get another possibly lower-paying job in order to get off employment insurance and return to the labour market?
Mr. Céré: [Technical difficulties] it’s important to first consider the current reality. Dr. Forget pointed out that the unemployment rate is 13.7% right now; it’s the same rate in Quebec. That doesn’t include the category called “not in labour force”, in other words, those who weren’t looking for work because of the pandemic. Finding a job during the pandemic and lockdown is somewhat difficult.
Right now, the real unemployment rate in Canada and in Quebec is roughly 20% or 22%. That is huge. The official unemployment rate in Montreal right now is at a record high. I work in that field; I’ve been advising workers for about 40 years, and never in my life have I seen an official unemployment rate in Montreal at 14.2%.
Of course people want to work, but the reality is that we’re going through a serious health crisis right now. Some employment sectors have been hit really hard. I speak not only with people who reach out to us for information, but also with employers and union leaders. In the aviation sector, Air Canada has laid off workers, Bombardier has also laid people off and Pratt & Whitney recently laid off 15% of its staff.
The Chair: Mr. Céré, I’m going to have to cut you off, as Senator Dagenais’s time is up. Could I ask you to complete your answer in writing and please send it to the committee clerk, Ms. Fortin?
Mr. Céré: Yes.
The Chair: Thank you.
Senator Smith: Dr. Forget, you were just getting into a medium- to longer-term option to follow up on what transpired with the student program to this point. I would like to you continue on, if you could, for a couple of minutes. We have three minutes. I’d love to hear your suggestions to move forward, to protect students and to give opportunities to students across the country.
Dr. Forget: I was talking about how we could transform the CERB in order to encourage people to go back to work, to ensure that people retained a larger proportion of their earnings when they did so. I was actually very close to the end of my comments. I think that there are a lot of benefits in retaining the CERB in a style that allows benefits to gradually disappear as earnings increase.
First of all, there’s always a benefit to working more hours, so we’ve got a direct financial encouragement to return to work. But at the same time, no one will be destitute if they don’t have a job available, if they can’t find a job, if they’re ill or if they have child care responsibilities.
Senator Smith: I understand from what you’re saying — at least, I hope I understand — that you were suggesting as people earn more money, there would be a reduced scale. It would probably be something that would be innovative to have, something that’s going on a descending balance so that students are protected and they keep their hopes and aspirations alive.
Dr. Forget: That’s right. For both students and for the unemployed in general, I think that’s right. The benefit will decline as people gain the opportunity to work and as their earnings increase.
Senator Smith: Would you say the government is doing a good job on this implementation program?
Dr. Forget: I think so, but I believe there’s an opportunity for improvement as well. I think that the improvement is particularly important now that the economy is changing and the opportunities are coming back in particular areas. I think when the CERB was designed, it was designed for a very specific economic and health situation. That’s beginning to change, and it’s beginning to change more quickly in some parts of the country than in others. One of the real strengths of the programs that were put in place is that they are evolving over time as we recognize gaps and better ways of doing things. I do think there are ways to transform the CERB to make it into an ongoing benefit that will be there for people who can’t access Employment Insurance and for the next pandemic, for the next crisis that comes along.
Senator Smith: Thank you, Dr. Forget.
Senator Galvez: I have three small questions. If there is not enough time, please send written answers.
To Mr. de Chastelain, there are three conditions for access to assistance for students. First, they have to work four months full time; second, they have to make a salary of at least $5,000; and third, they have to have lost their job due to COVID. These three conditions are not easy to meet for students because they are not four months free, for many reasons. I am worried about the penalties. Are you worried? Are your members worried that there will be penalties because some people had to provide some data that is not exactly true?
To Dr. Evelyn Forget, I hear you. Do you think that CERB can be retained later and converted to [Technical difficulties] why and how?
To Mr. Céré, you spoke about the environmental transition being so important, and you referred to Louise Arbour. If you can expand on that and the reasons, because this is so important at this given time, I would appreciate it. Thank you.
Mr. Céré: Everyone is talking about the possibility of a second wave of COVID-19; this crisis might not be over. Important voices have been speaking out, and what Louise Arbour said really struck me. She pointed out a possibility that political and economic powers are already considering, which is a climate crisis with rising water levels, transformations, displaced populations because of those transformations, and the impact they will have on our coastal areas. There is a risk of serious crises, and the one we are in right now has uncovered some of the weaknesses in our social safety net. Some of the weaknesses in the labour landscape have to do with working conditions and salaries. We need to be ready for the next time, and we need to take stock of what’s happening right now in order to better prepare for the next crisis. Whether it’s a COVID crisis or climate crisis, we need to be ready.
Senator M. Deacon: I thank our guests for being here today, particularly where we are right now in the timing of the middle to the end part of June in the work we’re all trying to do.
My question is to Mr. de Chastelain. It keeps me awake at night thinking about our students this fall, be it grad students, mothers going back to school, folks in their highlight years of university or college or alternate work, or our high school graduates. It’s a very significant area. It’s a significant and unfortunate part of the whole COVID-19 piece, but I have also had a chance to talk to a number of students and professors; these are international students, students who are just living at home and going to school and students who are travelling all over the country, so there is a great variety. And there are professors, some who have engaged and think they are better for teaching online and servicing online, and some who have answered that teaching online is an absolute disaster and loss for their students. It really does go across the map.
But we are gearing up. We now are in June, and we now know that students are making decisions and, of course, undoubtedly there is disappointment. Their learning and their learning environment in university is so much more than going to a classroom; socializing, civic engagement and so many things are done in person.
Are we closer to getting a sense of what students anticipate doing in the fall? You made some general comments about it, but are we getting closer to understanding just how this might impact our university and college environment?
Mr. de Chastelain: Thank you, senator, for the question. I think it would be realistic to say that this is a less than ideal environment for students as we head back into September 2020. I think that there are a number of important considerations for students. One thing that I would offer, using Halifax as an example, is that four of our universities here in the city only made the decision in the last few weeks that they were going to be moving to a digital semester in the fall. So a lot of students are still considering what they’re going to be doing.
I would come back to the fact that at the foundational level, it’s necessary for students to feel like they can learn online and that they have the tools they need. In a recent poll that CASA commissioned, we found one in two students had significant concerns about reliable internet access to be able to learn online. That’s just one of the many concerns that you bring forward in terms of the next steps.
The Chair: Mr. de Chastelain, if you want to add to the answer you gave, please do so in writing through the clerk.
Senator Klyne: Welcome to our panel of witnesses. My question is for Mr. Céré.
Mr. Céré, regarding CERB, you have expressed concern for the arts, cultural and seasonal industries, citing that in the coming weeks — for sure by mid-July — a good number of unemployed workers will come to the end of the maximum 16 weeks in total within the eligibility period of March 15 to October 3. Some workers in these industries will retain the right to EI, and a number of others, like the self-employed, gig workers and cultural and seasonal industries, will not. Yet the job employment crisis remains, and until a vaccine comes along, COVID-19 will be with us.
Can you provide this committee with your thoughts on what the government should be considering in this regard as workers come to the end of their maximum of 16 weeks on CERB?
Mr. Céré: Right now, three million people are unemployed. Before the crisis began, there were about a million unemployed people in Canada.
Beginning in mid-March, a real tsunami hit the labour force. The economy is just starting to open up again, but it remains severely affected. There are currently about three million people who are out of work. That’s a really high unemployment rate, and some people are worried.
The C.D. Howe Institute released its position on this issue today, and I have to agree with it. Some people are getting to the end of their CERB payments, but they won’t necessarily find a job right away and aren’t eligible for EI. You mentioned seasonal workers, and this is true for them.
Some seasonal workers who finished their season last fall and were no longer getting any EI payments were fortunately granted access to CERB, but that will soon end. Many of those seasonal workers were upset with the employment situation or the length of the working period —
Senator Klyne: Do you have a solution or recommendation for the government?
Mr. Céré: We need to move quickly, and that’s what’s happening this week, with the announcement that CERB will be extended. In the medium term, over the next few months, we need to begin a vast brainstorming exercise and study of this EI program as well as what many senators have been talking about, namely, a guaranteed minimum income program. We need to start seriously reflecting on this whole issue and, in the very short term, people need to know that CERB is being extended, because some people are extremely worried right now.
The Chair: Mr. Céré, if you want to add to that question, I would ask you to please do so in writing through the clerk.
Senator Boehm: My question follows the line of earlier questions from Senator Richards and Senator Deacon.
CASA has been, of course, polling its membership. The issue is not as much quantitative as qualitative. Is there real value in online education? Does it merit the current cost of tuition fees?
My understanding is that in your discussions with the universities about getting a rebate or a reduction in tuition fees, it hasn’t gone very well. In fact, some universities are raising their tuition fees, particularly for international students.
Are you speaking with other student associations around the world in similar educational environments as to their experience? I am also wondering whether you are looking ahead, in fact, to have another go-around with the universities on the issue of tuition fees if we’re looking at a prolonged situation of online learning.
Mr. de Chastelain: Thank you, senator, for the question. I would mention, first and foremost, that student associations tend to go through those rounds of negotiations either at the provincial level or at the institutional level based on how tuition is regulated; but it is fair to say that we have seen increased discussion about the value of education online and whether students should be expected to pay similar tuition fees.
What I would offer here is that there’s an important distinction between tuition that students are paying and the fees that oftentimes go toward on-campus services. For example, if students are not able to be in an in-class lab environment, should they be expected to be paying lab fees?
I think it’s going to be important for all of our student associations and all of our member schools across the country to be taking a hard look at what students will be paying for in the fall, hoping to be able to articulate to their students what their tuition and fees will actually be going toward.
Senator Boehm: How often do you poll through the association?
Mr. de Chastelain: We recently put out a poll commissioned through Abacus Data in May. We tend to do that in response to a number of challenging situations for students. Recent polls also included one that surveyed students on issues ahead of the federal election last year, and it’s something that we tend to do when we know students are facing some difficult circumstances.
Senator Boehm: In these circumstances, would you be looking at more polls, getting a better feel of what the membership is thinking?
Mr. de Chastelain: I think it’s definitely something for us to consider. We know that students are definitely being surveyed a tremendous amount right now by institutions that are looking for data, as well as organizations like CASA. It’s something that we will definitely continue to do and keep regular contact with our membership to get a sense of how COVID-19 is impacting students in every province and territory, and how it’s impacting students across the country.
Senator Boehm: Thank you very much.
Senator Duncan: Thank you to all of our witnesses for being here today. I appreciate it very much.
I would like to direct my questions to Dr. Forget. She spoke of transforming CERB. I would like to pick up on that comment. Senators have noted that CERB demonstrates the federal government’s ability to provide basic income through the Canada Revenue Agency on a national scale and adapt quickly, as needed, when the political will exists.
I’d also like to pick up on another comment by Dr. Forget where she talked about all of the costing I’ve seen. Sitting on the National Finance Committee, the devil is always in the details. And in this particular case, we’re talking about providing income to Canadians that involves the federal government, provincial and territorial governments, First Nations governments, and circling back to the federal government that also, of course, involves Crown and Indigenous relations for non-settled First Nations.
I’ve asked earlier presenters from the government if there’s a working group to examine the way forward on this issue; there doesn’t seem to be. There are more than 50-plus senators throughout the Senate who feel that this issue should be examined. It needs to be examined. There’s an opportunity here.
To play, perhaps, to some of Senator Smith’s strengths, I’m wondering how we get this ball across the goal line. I’m worried that it’s going to be fumbled and dropped.
I would like Dr. Forget to address — perhaps in writing, if possible, or within the very short time we have left — how this issue of basic income, a modified CERB, getting assistance to Canadians might move forward when our attention turns elsewhere.
The Chair: We’ll do that in writing, please. Thank you.
Before we go to Senator Loffreda, please permit me to recognize other senators who have joined our first panel and will be with the second panel as well: Senator Gagné, Senator Martin, Senator Pate, Senator McCallum and Senator Patterson. Thank you very much, senators, for joining the Finance Committee.
Senator Loffreda: I’m always pleased to finish off the meeting. My question is for Mr. Céré. It’s an important one, and there’s been a lot of talk about this issue. As the spokesperson for the Conseil national des chômeurs et chômeuses, do you see this pandemic as the perfect time to replace EI with a universal basic income program? What kind of impact do you think a basic income would have on social assistance programs, which are managed by the provinces? I think it’s really important that we understand the impact, and if now isn’t the right time, what do you think of our proposal to amend the EI program? Thank you.
Mr. Céré: [Technical difficulties] our history always reveals the shortcomings in our system. That was true in the 1930s, and it was found that not enough was done during that period to help unemployed people. Work camps were even created at the time.
Seeing what was happening in the United States with the New Deal, authorities decided to create the same thing in Canada, which basically became the “Canadian New Deal.” An employment insurance system was created in the context of constitutional negotiations. You probably know more about that than I do. Social programs come under provincial jurisdiction. A constitutional amendment was introduced in 1940 to bring that power back to Ottawa in order to create the EI program, which has evolved over time.
As I mentioned earlier, the Second World War is what led to another kind of reflection and the creation of the welfare state in the 1950s and 1960s. I think this crisis should also give rise to some serious reflection. Honourable senators, many of you, at least 50 or so, have brought up the issue of a guaranteed minimum income. I would really welcome such an initiative. Is it the answer to everything? Not necessarily. Are there other ideas? Of course. Is the EI system a kind of juggernaut that has become somewhat outdated in light of current events? Yes. Should it be overhauled? Yes.
Above all, we need to make sure there is income replacement. My job is not to promote unemployment; it’s to keep people working. However, when someone does lose their job, they need income replacement. That is what unemployment insurance is, or employment insurance as it’s been called for about 20 years now. This system needs to be overhauled, and it’s not contradictory to think about giving a guaranteed minimum income to every Canadian citizen. This will take some serious reflection and will obviously require some discussions between the Government of Quebec and the Government of Canada.
Senator Loffreda: Could you please provide us with your view on the impact of social assistance programs administered by the provinces? Thank you.
The Chair: Mr. Céré, please provide a written reply to our committee clerk.
Before we close the first panel, the chair will recognize one question from Senator Gagné and one question from Senator Martin.
Senator Gagné: Thank you to all the witnesses. The chair had a good question. Perhaps I would ask Dr. Forget to give us an idea on the following: If ever we transform the CERB into a permanent guaranteed livable income program, would it threaten the viability of some provincial programs essential to cope with the poverty in a sustainable way? If you could either answer right now, if you have time, or send a written answer to the clerk, I would appreciate that.
The Chair: Thank you.
Senator Martin: Given the time constraints, I will not ask a question, but simply thank our witnesses for the incredible work they are doing for their members. My colleagues have asked a lot of very good questions, so I’m okay on this round, chair.
The Chair: Dr. Forget, you have heard the question from Senator Gagné?
Dr. Forget: Yes.
The Chair: Can we ask you to please respond in writing to the clerk?
Dr. Forget: Yes, I will.
The Chair: This will conclude the first panel. We will now move to the second panel. To the witnesses, again, thank you for being here with us to share your comments, your opinions and your recommendations.
The second panel is on Indigenous issues.
Honourable senators, we welcome our witnesses for the second panel. First, from the National Aboriginal Capital Corporation Association, the Chief Executive Officer, Mr. Shannin Metatawabin. From the First Nations Tax Commission we welcome the Chief Executive Officer, Mr. C.T. Manny Jules. Finally, from the First Nations Financial Board, we welcome the Executive Chair, Mr. Harold Calla. To the witnesses, thank you very much for accepting our invitation. I have been informed that the first presenter will be Mr. Metatawabin, to be followed by Mr. Jules and Mr. Calla.
Mr. Metatawabin, the floor is yours, please.
Shannin Metatawabin, Chief Executive Officer, National Aboriginal Capital Corporations Association: My name is Shannin Metatawabin and I’m the Chief Executive Officer of the National Aboriginal Capital Corporation Association. I am a member of the Fort Albany First Nation of the Mushkegowuk Nation. I would like to thank you for the invitation to speak today on measures to relieve the impact of COVID-19 on Indigenous businesses in Canada as well as on their gaps and means to improve them.
Before I start, I would wish to acknowledge that this call is being hosted on the unceded traditional territory of the Algonquin people.
The National Aboriginal Capital Corporations Association, commonly referred to as NACCA, represents 59 Aboriginal financial institutions from coast to coast to coast. NACCA also administers delivery of the Aboriginal Business Financing Program. Our members provide developmental loans to thousands of First Nations, Inuit and Métis businesses from across Canada. For over three decades, they have worked on the front lines with Indigenous businesses to ensure that they can thrive and contribute to Canada’s economy. Each year, Aboriginal financial institutions make over $120 million in loans to 500 Indigenous-owned start-ups and 750 existing businesses.
Indigenous businesses are key drivers of employment, wealth creation and better socio-economic outcomes for Indigenous communities and people; 72% have better life satisfaction, 30% better health indicators and 52% better mental health indicators. COVID-19 has hurt many of our businesses, something that our network expected. As one of the members put it, no sector will be immune from the event. The Prime Minister’s announcement on April 18 was truly welcome news. We thank the government for the $306.8 million to support Indigenous businesses negatively impacted by the crisis.
I signed a contribution agreement with Indigenous Services in the last week of May. To date, we have approved eight AFIs to deliver and the remaining funds will go out to the rest of the AFIs. The relief support has certainly helped, but it’s not yet going far enough. Your committee has also asked about gaps and means to improve measures. I suggest there are two critical ones, yet I will leave some additional ideas.
Emergency business support measures for Indigenous business would drastically be improved if the non-repayable allowance were increased. After all, COVID-19 is only one of the latest of many barriers that Indigenous businesses have to overcome. Remoteness impediments thrown up by the Indian Act, land tenure, poor socio-economic conditions on reserves are all factors that non-Indigenous business owners do not have to contend with. The current relief package does not yet acknowledge these additional barriers. Beyond this, a full 36% of Indigenous businesses report that they are unable to take on new debt according to a task force survey.
Number two, targeted support is needed for larger Indigenous-owned enterprises. The relief package under the current program is targeted at Indigenous small- and medium-sized enterprises, not medium and large community-owned business that many of our members also serve. At present, we are advising that our members only support smaller community-owned businesses, for which $40,000 is proportionate to the immediate cash flow needs. Our medium- and larger-owned businesses are simply being left out. This is a significant gap to address that we recommend additional support be provided.
Some additional recommendations include returning the NACCA network to historical funding levels. Over the past 25 years, there has been a 70% decline in support for this network, whereas the Royal Commission on Aboriginal Peoples, when it was recommended, said that 5% per year was required. The Indigenous Growth Fund announced in Budget 2019 was to launch at $100 million; we cannot lose momentum on this and it needs to continue.
The 5% target for procurement with Indigenous businesses, which was announced by the Prime Minister and your committee, is very important to ensure that we continue to target this. Aboriginal financial institutions are Indigenous-led institutions. Our members work tirelessly to develop solutions with and for Indigenous people working with government. Our 35-year track record in supporting Indigenous business is enviable; however, our success is still limited by the amount and type of support that Canada makes available.
A stubborn fact remains: Indigenous businesses, both large and small, were already in economic disadvantage before COVID hit. From that position, they need to make twice the effort that an average Canadian business will make in order to repay those loans. This is a gap that the current COVID-19 relief measures need to address as the committee looks to improve them. Thank you very much.
The Chair: Thank you very much.
C.T. (Manny) Jules, Chief Commissioner, First Nations Tax Commission: Honourable senators, good afternoon. My name is Manny Jules. I am the chief commissioner of the First Nations Tax Commission, one of three institutions created by the First Nations Fiscal and Management Act, or FMA. I was also chief of the Kamloops Indian Band from 1984 to 2000. Thank you for this opportunity to address this committee as part of your study on the government’s response to the COVID-19 pandemic.
I have previously appeared before this committee to promote the FMA as a model for legislating our way back into the federation and the Canadian economy. The FMA model has worked. There are 300 First Nations across Canada successfully using the FMA to develop their economies and expand their jurisdiction. Then, suddenly, COVID-19 happened. Today I wish to discuss the proposals we made to the federal government, using and expanding upon the FMA as a platform to help Indigenous economies recover and emerge stronger out of the COVID-19 pandemic.
Past pandemics of smallpox and influenza became opportunities for colonization and to legislate Indigenous peoples out of the economy and federation. They were used as a justification to take away our title and fiscal powers. They reduced our status to dependents and wards of the state. But we are resilient. We have learned from our history. This time we were ready.
On March 24, we wrote to warn the federal government of the pending health and economic crises facing our communities. On April 9, we followed up with a second letter providing an estimate of the value of these impacts and proposing a recovery strategy. We advised that the impact on our economies would be devastating. We estimated that our governments and businesses would lose billions of dollars, and thousands of jobs would be lost. Sadly, so far, we have been right.
We presented the government with an economic strategy to save emerging First Nation economies. It included practical proposals to help maintain services when revenues collapse. Last week, we heard a positive announcement to support the First Nations Finance Authority proposal. However, we are still waiting to hear about our other proposals.
We have closely followed the government’s economic response to the pandemic. We estimate that Indigenous peoples are only receiving 50% as much as other Canadians on a per capita basis. I say that because we cannot let COVID-19 further increase the disparities between First Nations and the rest of Canada. We must make sure that our hard-earned economic progress is not undone. We believe that an Indigenous economic recovery strategy built on the successful FMA framework can only enhance the overall Canadian economic recovery strategy.
First, expand the First Nations Fiscal Management Act to include a First Nations infrastructure institute that will certify shovel-ready economic infrastructure projects much faster. With a legislative base and standards, we estimate it will be up to five times faster than the current regulatory framework.
Second, monetize existing federal infrastructure transfers so that more infrastructure can be built sooner. This is the most cost-effective way to provide stimulus. At current interest rates, $150 million over 10 years can provide $1.3 billion in shovel-ready infrastructure now.
Third, expand Indigenous fiscal powers to include sales, resource, tobacco, cannabis, excise and income taxes. We are the most transfer-dependent governments in Canada. Less than 5% of our government revenues come from our taxes. Our economic growth has generated billions of tax revenues for other governments. It’s time to remove this unjust remnant of past pandemics.
Fourth, expand the mandates of the FMA institutions so they can provide more support to all interested Indigenous governments and organizations. We have proven that optional First Nation led and First Nation institutionally supported legislation works. Expanding the options is the best way to ensure greater participation in the recovery strategy.
This recovery strategy will provide the foundation for a stronger Indigenous investment climate. It will mean we have the same opportunities to participate in the national recovery strategy as all other Canadians. We have been working for the past two months with the federal government on this strategy and are hopeful the necessary legislative changes we have proposed are accepted and presented to Parliament by this fall.
Should that happen, I hope we can count on the support of the members of this committee. But hope alone is not enough. We cannot let this pandemic leave yet another generation behind. Our chance to deliver change is now. Thank you.
Harold Calla, Executive Chair, First Nations Financial Management Board: Thank you and good afternoon. I appreciate the opportunity to appear before you today. The COVID-19 pandemic has created a worldwide challenge that is requiring all governments to use their fiscal capacity and legislative powers to lead their nations through these troubled times. The roles of government, the private sector and the international relationships, both at political and economic levels, are being examined. A new normal will be the result.
Let us see this as an opportunity for our federation to reinvent itself, to create a society that is more inclusive, stable and representative. This means moving beyond the status quo. It must mean systemic change in how we govern and support our economic future. Transformative change is so important for Indigenous communities. Canada must and is using its fiscal capacity to support Canadians and our economy. The Indigenous community cannot be left behind as initiatives are being considered and implemented.
There have been many indicators recently that the pandemic that exists in our communities will not be eliminated with the cure of COVID-19. UNDRIP provides a framework we can follow to bring our people and our governments into the federation as was intended. The investments needed are going to be significant. Let’s not shy away from acting because of this. The cost of doing nothing is the sunk cost and will, in the long run, be much higher.
You have received a copy of the letter from the FMA institutions that was sent to the Ministers of Finance, Indigenous Services and Crown Indigenous Relations. The letter lays out a series of opportunities to support our Indigenous people and their governments, support their businesses and promote economic development as we recover from COVID-19.
Many of our communities are becoming social enterprises that contribute to local, regional and the national economy. FMB has provided you with some of the research we are doing to gain a measure of the impact on the Indigenous economy because I don’t think most of us realize how significant it is. We will continue with this work and hope that this points to the benefit of re-establishing a First Nations statistical institute, because we all make better decisions when we have information.
Suggestions in our letter range from a backstop to the FNFA borrowing pool, protecting our taxation systems, investing in infrastructure through an Indigenous lens and expanding First Nation fiscal powers. We also recognize the need to facilitate administrative and financial management aggregation to increase capacity and increase the access to the capital markets at rates reflective of other orders of government.
This is what systemic change looks like. Today, the immediate challenge we hear from our clients — and there are nearly 300 — is that the current initiatives have not been inclusive. Those that have been inclusive have not been implemented in a timely way. You have the opportunity to change that. Thank you.
The Chair: Thank you. We will move to questions.
Senator Marshall: Mr. Jules and Mr. Calla, you both mentioned the March 24 letter that you sent to Minister Morneau, Minister Bennett and Minister Miller. I read the letter. In one of the first items you mentioned, you requested from the government temporary shelters to physically isolate people and to provide care facilities for those who contract COVID-19. I’m just reading from your letter.
This related issue has been before the National Finance Committee in the past. A couple of years ago, we had a pediatric respirologist from the Children’s Hospital of Eastern Ontario, and we also had a globally recognized toxicologist from Carleton University testify before our committee. They testified that bronchitis and pneumonia are 30 times higher for children and infants living in First Nations and Inuit communities compared to infants living in the southern part of Canada.
Knowing that COVID-19 attacks the lungs, could you tell us the type of reception you have received from the government in terms of requests for temporary shelters? I would be interested in hearing this, because it relates to previous work we have done in that area.
Mr. Jules: One of the things I mentioned in my opening statement is that on a per capita basis, we’re getting 50% as much as other Canadians. So it puts us in the position where we’re behind the eight ball and not able to keep up with the demand within our communities for personal protective equipment in order to protect ourselves and to ready our communities. That’s simply because we don’t have the jurisdiction. Jurisdiction lies with the federal and provincial governments, because we don’t have the resources to be able to look after ourselves. That’s one of the reasons why, as part of the economic recovery strategy, we have to have greater fiscal powers.
Senator Marshall: Is there a higher rate of transmission of COVID-19 in Aboriginal communities? Do you have that information?
Mr. Jules: All you have to do is look south of the border, particularly the Navajo reservation, with the highest rates of COVID-19 in the United States. That’s because they don’t have adequate health care and they don’t have the jurisdiction. A lot of their economies have been based on what I characterize as loophole economies: casinos and others like that. What we need is a vibrant economy that is diverse.
Senator Marshall: We haven’t heard anything about the boil-water advisories. I’m sure there are still a number in effect. Has that also had an impact on the spread of COVID-19?
Mr. Jules: Absolutely. That’s one of the reasons we’re promoting the First Nations Infrastructure Institute. Instead of dealing with one community with a boil-water advisory, we can deal with 100.
The Chair: Mr. Jules, could you please complete your answer in writing to the Senate committee, through the clerk?
Mr. Jules: Yes.
The Chair: Thank you.
Senator Forest: Thank you to all the witnesses for enlightening us on this matter. My question is for Mr. Metatawabin. In the brief presented to the committee, the National Aboriginal Capital Corporation Association referred to the conclusions of a recent survey of Indigenous businesses conducted this year by the COVID-19 task force.
Could you tell us a little more about this survey? Were there any key findings from the survey that might be pertinent to our study in terms of how the government has responded to COVID-19?
Mr. Metatawabin: Eight national institutions participated in a business survey of our community. We found that 91% were negatively impacted by COVID-19; 30% have suffered more than a 50% decline in revenues; and 68% were impacted by employment of their people.
A big finding of the survey is that 22% can’t earn enough income to take on more debt; and 14% said their current debt servicing is already too high to take on additional debt, so the emergency support that was announced is just adding debt.
For our people, who face so many barriers, our recommendation is to increase the non-repayable portion from 50% to 75%, because it will take us twice as long to earn that revenue back in order to pay back the same loan that a regular Canadian would make on the Canada business account.
Senator Richards: Thank you very much to the panel. I appreciate all your presentations today. They are extremely important and insightful. I’m not asking a question. Time limitations have prevented certain senators from asking questions. I’m hoping that Senator Martin will be able to ask a question later.
Senator Harder: Thank you to our witnesses. My follow-up question is to Shannin Metatawabin from NACCA.
In your comments, you mentioned the gap in the current COVID relief program for larger Indigenous businesses. If you could, I would like for you to give us a bit more information on this. What kinds of businesses are you referring to, and what are their particular financial needs? Are their needs being met in other ways at the present time?
Mr. Metatawabin: Thank you for that question. Over the past 30 years, our network has supported 47,000 loans, and up to $2.7 billion in lending, to small- and medium-sized enterprises. We are now seeing larger businesses being created in the Indigenous community: hotels, large service-type businesses, and manufacturing. In the survey we conducted, 46% say they need more than $40,000. So there is already a gap. And 25% say they need more than $100,000 just to last the next four to six months.
There is a huge gap with the large- and medium-sized enterprises. Indigenous Services Canada indicated they submitted a request for larger businesses, but at this point there have been no announcements. A large percentage of our network is larger businesses, so the $40,000 is not going to meet the needs.
Senator Harder: What is your definition of “large”? What is your financial cut-off?
Mr. Metatawabin: In terms of our network, 85% of them have fewer than five employees, so we are essentially small and micro-type businesses, if you use the definition of the Canadian business. When we’re talking about medium and larger businesses, we’re talking beyond that number, so 10 to 100 people.
Senator Harder: Thank you very much.
Senator Smith: Thank you to the witnesses. I have a question for Chief Manny Jules. You talked about infrastructure and Indigenous projects. Could you provide more information in terms of how you see the opportunity of infrastructure projects within First Nations? How do you coordinate that opportunity with the various members you have and with the divergent groups of Indigenous populations?
Mr. Jules: We’re proposing a legislative base under the First Nations Fiscal Management Act that provides standards and a basis to ultimately monetize, we hope, federal funding. It also allows us to reach out to private-public partnerships.
There is no way that the federal government — or, indeed, First Nation governments — can rectify the infrastructure deficits within our communities, which is upwards of $45 billion. We require an institution that is part of the FMA, which is optional, so that First Nations can make a choice as to whether or not they want to participate. This comes out of the experience of the Second World War with General Marshall and the development of the Marshall Plan.
We are hoping that this will be a coalition of the willing, that communities will be able to participate in the Infrastructure Institute. We would be able to then move projects literally at the speed of business. So instead of building one water system, we’d be able to build 100. That kind of approach is absolutely necessary, particularly because of COVID. One of our high priorities is not only dealing with potable water, sewer systems and business-ready infrastructure but also preparing us for the next pandemic that will surely come our way. That means reaching out and working with First Nation health organizations across the country.
Senator Dagenais: My question is for Mr. Metatawabin. The government recently allocated $306 million in financial assistance that, through your organization, will help businesses affected by the current situation.
Can you tell us a little bit about the businesses that will benefit from that assistance? How are they selected? Have any of them already received any funding from the government?
Mr. Metatawabin: Thank you for the question. The announcement came on April 18. It was announced for current and former clients of the Aboriginal Financial Institutions network, so the 47,000 businesses that we’ve supported to date are what the announcements are for. It was to support approximately 6,000 businesses.
We are going to be prioritizing those businesses, the 47,000. We’re trying to save our infrastructure that we’ve created over 35 years. It’s important to ensure that this infrastructure and the Indigenous community — it’s an economic driver for our community — is retained so that we can continue to grow. I mentioned that we were just announcing an Indigenous Growth Fund to attract private sector capital. It was going to start at $100 million. The BDC has already signed a term sheet with us. The EDC and the FCC both want to participate, and it’s important that we continue on that track to ensure we are growing Indigenous businesses. So this $306 million is so important to protect our network.
Senator Dagenais: If I understand your reply correctly, the money will be allocated to your organization, and I imagine it will then be distributed amongst the various small- and medium-sized businesses believed to need it?
Mr. Metatawabin: The program that was announced is no different than the mainstream program. It’s the Canada business account. Basically, it is $40,000 provided to a business to support their operations. That’s what we’re delivering. We’re delivering it through our infrastructure of Aboriginal Financial Institutions, and we’ve already started that process right now.
Senator Galvez: I would like to welcome and thank our panellists. First, I would like to recognize that coming from South America and knowing very much what’s going on with Indigenous people in the Americas, I recognize that Canadian Indigenous people have developed and evolved in a very fantastic and unique way. Kudos for your different business models that have allowed you to escape from the loophole economy.
My question is for Mr. Metatawabin, because what COVID has also uncovered is the difference by which it has tackled different populations and within the same populations. I know COVID is really impacting hard on women, on Indigenous women. I would like to ask about some statistics. Out of all your members, what percentage is owned by Indigenous women? Can you explain some of the businesses that females are developing?
Mr. Metatawabin: Thank you for the question. We are actually just expanding our programs to include women-specific programs and capacity programs to ensure that we keep on elevating that area. But 35% of our loans go to Indigenous women, and they cover a wide range of industries. They have unique needs, and we’ve identified that those are unique needs to support the family. Indigenous women repay their loans at a higher level. They are more reluctant to take on debt because it’s all about the risk for their family.
We recognize that, so we want to make it more of a versatile program that allows part-time and on-the-side businesses to begin that process. We want to launch a microlending program. It’s so important to support our Indigenous women.
Senator Galvez: Thank you. Could you mention a couple of types of businesses in which they work?
Mr. Metatawabin: There’s a cattle operator in Alberta that I spoke about on CBC one time. She started with a small herd and now she’s into the hundreds of cattle. She got turned down by mainstream financial institutions again and again. When she went to the Aboriginal Financial Institution, they progressed her to grow into that large herd that she has. That’s one type of business. We also have technology companies and production companies.
Senator Galvez: Thank you.
Senator M. Deacon: Thank you to our guests today. Actually, to confess, it has taken me a while to figure out how your roles are different and how some of your work converges. Thank you for being here. I’m going to direct my two questions to Mr. Metatawabin. I appreciate that.
First, to start off with, your submission did not refer to the Indigenous procurement quota relating to COVID-19 relief measures. However, you did mention this in your recent appearance before our colleagues at the Standing Senate Committee on Aboriginal Peoples. I’m wondering if today you’re able to make any comments on progress with that item and that aspect of your work?
Mr. Metatawabin: We have a task force of about eight Aboriginal financial institutions across Canada. We have about 500 to 600 or 700 businesses that are able to assist with the COVID crisis. We have a whole list, a database, and we are trying to get them in line with PSPC to be recognized and obtain their bid.
So far, we haven’t had any business success in that area. It’s indicative of the last 30 years. Fewer than 1% of all government contracts go to Indigenous businesses. It’s a cultural thing. We need to improve that.
Senator M. Deacon: Thank you for that.
This is related; it may not appear it, but I feel it is very related. In Budget 2019, the federal government announced $100 million to launch the Indigenous Growth Fund. Can you provide to this committee, at this moment, an update on the status of that fund at this time?
Mr. Metatawabin: The COVID-19 has put that on the back burner. We had some success and some good news in February when we signed a term sheet with BDC for $50 million. I think Minister Morneau anticipated announcing an official launch in the spring but this is on hold. We’re just asking not to lose momentum on that. This is a good source of low-cost capital to attract private sector investment into the business development area.
Senator M. Deacon: So it’s a pause right now since that signing at the end of February?
Mr. Metatawabin: We haven’t heard anything. We’re in emergency mode right now, but we’re hoping to get back into it.
Senator M. Deacon: Thank you very much.
Senator Klyne: Welcome to our panel of witnesses.
My question is for Mr. Metatawabin. In your statement, you suggested that a greater proportion of the current emergency loan program for Indigenous businesses should be non-repayable. What would require such a variance from the general Canadian response to the emergency loan program? Is there a different model that you could point us toward that would be more appropriate for Indigenous businesses and the Aboriginal financial institutions?
Mr. Metatawabin: What’s important to realize is that Indigenous people have not participated in the Canadian economy. There have been large barriers put in place that prevented us from participating.
Thirty-five years ago they created the network of Indigenous financial institutions to ensure that we break those barriers and deal with our own people, with Indigenous organizations providing services to Indigenous people.
With the many barriers, including our remoteness, credit history, we don’t have generational wealth, we can’t take security because of section 89 of the Indian Act, lower skills, far from the market, it will take us twice as long to earn revenue, to pay back the loan that’s being provided to mainstream Canadians and to Indigenous peoples. Therefore, I am saying that we should provide 50% to 75% non-repayable.
Senator Boehm: Thank you to all of the witnesses. I too have a question for Mr. Metatawabin with respect to the programs for Indigenous businesses and looking at support for them. I think the language that was used indicated those who were otherwise thriving and viable but were heavily impacted by the crisis.
What kind of a timeline were you looking at in order to define “thriving and viable”? In particular, I ask with respect to seasonal and developing business in mind.
Also in that vein, in terms of the Canada Emergency Wage Subsidy program, how would that be calculated with respect to seasonal businesses or start-ups that may not have yet started their revenue season in fact?
Mr. Metatawabin: I don’t think there’s any industry that has been more severely hit than our tourism industry. They are going to be suffering already from loss of businesses that have been shutting down. It’s going to take twice, three times as long to rebound because the Canadian economy is starting to show signs of coming back, but in the Indigenous communities that are far from the market, it’s going to take longer for people to start procuring businesses back to our businesses in the community.
Senator Boehm: Thank you.
Senator Duncan: Thank you to the witnesses. I must say, Mr. Chair, that I’ve been remiss in not recognizing that I am coming to the National Finance Committee from the traditional territory of the Ta’an Kwäch’än Council and the Kwanlin Dün First Nation.
Perhaps Mr. Metatawabin would like to address this question. There doesn’t seem to be any mention in the materials that we’ve received for this presentation of joint ventures, where we have seen First Nations joint venture with non-First Nations companies to participate in the economy to provide services to Canadians. These companies, of course, have also been very hard hit by COVID-19. I’m thinking specifically of the northern air carriers, Air North with the partnership of the Vuntut Gwitchin First Nation, a self-governing First Nation, and the Canadian North, which is 100% Inuit-owned by Makivik Corporation.
These First Nations will also have specific guidelines around their financial participation related to their First Nation government. Could you address the gaps, in this particular area, of the joint venture of Canada’s First Nations?
Mr. Metatawabin: Thank you for that question. There is a portion of our Indigenous businesses that have joint ventures. It’s a common practice with resource development that there are a lot of joint ventures, but we’re finding that our skills in this capacity and the size of our businesses are growing to where the joint ventures are not required but it is still a part of our business. Joint ventures exist and with this COVID response, you can see that there have been quite a few joint ventures created to build up the 500 to 700 businesses that want to participate.
Senator Duncan: Is there a particular gap where the joint ventures and funding for the joint ventures are falling through in all of the government, federal and provincial programs that are being offered to help the business community combat the effects of COVID-19?
Mr. Metatawabin: I think the big area [Technical difficulties] but they didn’t. Earlier on, they didn’t recognize revenue that was tax-free. First Nation communities on reserves have revenue, but it’s not recognized. So that was a big gap and I think that has been rectified now so they can participate. However, a lot of the support that has been created is more lending. The same situation, a community that is needing more non-repayable, needing more granting to give it a boost.
The Chair: Thank you.
Senator Loffreda: Thank you all.
Mr. Jules, if you were to elaborate on one option that would have the largest immediate impact on the state of the economy for the Indigenous businesses, the Indigenous communities and the Indigenous people, which one would it be?
Mr. Jules: Really, it’s two. I’ll first address the First Nations Infrastructure Institute. It’s absolutely critical that we take on this jurisdiction to begin to look after ourselves. That’s followed quickly by having a share of all of the resources that are collected within our communities. It’s incredible. Right now, the federal and provincial governments collect $750 million from our developments on reserve, whereas we collect $50 million a year from property tax.
There’s a huge disparity between the jurisdiction that we’ve got. The more jurisdiction we have, the greater capacity we have to look after ourselves. Then one of the things that needs to be addressed is a proper land title system so that we will be able to go to the banks and get mortgages so that individuals can build their own homes. That’s one of the largest areas of indebtedness held by our First Nation governments.
The most important initiative that I’m now advocating is support for the First Nations Infrastructure Institute. I think we’re ready for that. We’ve got the proposals that are going forward to your committee and to the federal government. I believe we could be ready for the legislation as soon as this fall.
Senator Loffreda: Thank you.
Senator Martin: Thank you to Senator Richards.
To all the witnesses, thank you so much for your insights. They are very important and valuable.
My question is to Mr. Calla, a fellow British Columbian. You said in your testimony that programs have not been implemented in a timely way. The committee has heard from other witnesses about some of these delays and I’m curious to hear more about what you were referring to and the impact that it has had on the Indigenous community.
Mr. Calla: We’ve heard from our clients that in the design and implementation of these programs, First Nation interests were not fully recognized in the development of the eligibility criteria. It took time for that to be recognized. It took time to engage with the bureaucracy. It took time to see changes brought about. You can see from the National Aboriginal Capital Corporations Association, the announcement was made two months ago, and now all of the challenges are starting to be resolved so they can start to flow money.
I think the issue around joint ventures was an excellent one, because how can you not look at joint ventures in Indigenous communities when you’re looking at joint ventures elsewhere?
We have to disconnect this concept that taxability is a barrier to access programs and services. One of the reasons we developed the report that you see on the first 75 communities is for Canada to start to begin to grasp the impact of economic development globally within the country and the contributions that we make. I think that barrier has to be removed and understand that there are many non-Indigenous people and many tax dollars that are generated from Aboriginal business, whether they are solely owned, joint ventures or not owned by Indigenous people at all on Indigenous lands.
Things like rent relief and property tax deferrals are all very pertinent to our communities and need to be considered and reflected on so we do not find ourselves in a position where we’re last on the list.
Senator Martin: Thank you.
Senator Pate: Thank you to our witnesses.
You mentioned earlier the issue of tourism as well as women-owned businesses and some of the challenges faced. In previous committees, when we have had discussions with Indigenous communities, particularly elders and Indigenous governance bodies, many have mentioned the need for a new kind of assistance program because of the large direct and opportunity costs that are involved in maintaining populations that are often living in poverty and often forced to rely on state assistance because of long-term colonial influence.
I’m wondering if you’ve looked, in particular, at some of the assistance programs that have currently been put in place through the CERB, as well as the recommendation made in the call for justice from the Missing and Murdered Indigenous Women and Girls inquiry for the establishment of a guaranteed livable income. I know from conversations that many of us have had with Indigenous leadership, there’s a very real interest in looking at these kinds of approaches to help improve the opportunities for economic growth and to increase the climate for Indigenous individuals and communities to actually be expanding opportunities for language development, cultural development and business development within their sphere. I’m wondering if any or all of you would like to comment.
Mr. Jules: One of the things that I advocate is our own jurisdiction. I appreciate there’s a need for a guaranteed subsidy for individuals who live in poverty, but the fact of the matter is that if we look at the potential for our involvement in the economy, it would be $32 billion as opposed to the $19 billion that is transferred right now to First Nation governments.
We’re advocating for greater tax jurisdiction so that we can begin to look after ourselves and not have to depend on someone else to provide us with programs.
Mr. Metatawabin: I would like to jump in as well. With any economy, there needs to be financial enablers. I think after the Second World War, you saw Canada come out with a lot of financial enablers to boost the economy. What we have had is a generational lap. Our community is just getting ready and could now use these financial enablers.
At the National Aboriginal Capital Corporations Association, we deliver a grant program to Indigenous businesses and they have for 30 years; $1 provided gives $1.42 back to the treasury department. That’s an investment because you’re having fewer social costs and other costs because 72% of them have better life satisfaction, better health and mental health indicators.
We need to look at the right enablers and adjust, looking at the growth fund, looking at giving the First Nations Finance Authority more broad ability to provide to economic development so we have low-cost capital. These are all solutions, and we need to look at them all.
Mr. Calla: It all starts with the ability for us to exercise our own jurisdiction. You can look at anything that has happened in business communities that are being led by Indigenous peoples and we’ve seen success, whether it be the FMA, the First Nations Land Management Act or the success of the First Nations Health Authority of British Columbia. When we take on responsibilities ourselves and have the fiscal capacity to manage those responsibilities, we can deal with many of the issues in ways that our community sees that doesn’t involve others. I think that’s important to understand.
There is a cost to doing business that’s created by the federal government having jurisdiction over 634 Indian bands across the country, and that has to be changed. Positive steps have been taken with the intention to move toward self-government, but you can’t do so without having a fiscal capacity to actually fund it. That’s what needs to change.
There is a systemic change required in this country in the way we think about what our place is in this federation, and we need to bring about the means by which First Nations as governments are recognized. The capacity is built in our communities to effectively manage self-government and we’re able to contribute to the gross national product through the economic growth that will result from that.
The Chair: If senators permit me the indulgence, I have a question. I will direct it to Mr. Jules.
When I look at what you are proposing and what you’ve shared with us — by the way, I want to thank you. Every time the Finance Committee has asked you to be a witness on different issues and challenges, you have always said yes to us. We want to recognize that and say thank you.
You were talking about percentages. I want to follow up on Senator Marshall’s question on infrastructure. What percentage of the population that you represent do not have potable water and a sewage system?
Mr. Jules: That’s one of the reasons we’ve been asking for a proper statistical institute to be reinstated as part of the FMA; it is so that we can track that type of statistic. We are going to be working with the Mi’kmaq people to look at 25 communities to make sure that they’ve got potable water as well as a sewer system.
I would say the vast majority of communities that we work with are in infrastructure deficit. The only way to correct that, in my view, is to make sure that we have the jurisdiction to have a broader tax base as well as instituting standards to build such infrastructure.
As far as accurate statistical information, we need that as much as your question asks.
The Chair: My last question is to all three witnesses. What amount of shovel-ready infrastructure is ready to go?
Mr. Jules: According to the First Nations Finance Authority, they currently have about $500 million of shovel-ready infrastructure projects ready to go. We’ve been very successful in going to the international bond market. As a matter of fact, there was one that was entered into today with great success.
I would just like to say a couple of other words in terms of closing statements. Those in authority must retain the public’s trust. The way to do that is to distort nothing, to put the best face on nothing and to try to manipulate no one. Lincoln said that first and best: Leadership “must make whatever horror exists concrete. Only then will people be able to break it apart.”
The Chair: To the other two witnesses, would you like to add to that before we close this session?
Mr. Metatawabin: I’ll just add that the Community Futures development network is providing the same program that we are to support businesses, but they are going to be retaining their loan equity at the end of it to further use within their network. We are not provided that same opportunity, so the Aboriginal financial institutions have to repay Canada.
We have to bring equity, because 40% of our Aboriginal financial institutions don’t have loan capital to support larger businesses as it is. We have $346 million in our loan portfolio. This would add to it and provide great access to capital. I would ask your committee to make that recommendation.
Mr. Calla: I would like you to think long and hard about my statement regarding the pandemic and our communities not ending with the cure for COVID-19. That’s the reality that we face. We need significant investments by Canada to be able to support the emergence of First Nation governments that can address the issues of their people, and to also address the issue of economic participation in this country.
If you look back over the last 12 months, the absence of consensus in First Nation participation in natural resource development has forced Canada to buy a pipeline. How many more projects is Canada going to buy if we don’t have First Nation participation? We need to be in a position where we recognize that if you do nothing, we’re going to be sitting here five years from now, and Indian and Northern Affairs will be a $30-billion-a-year program.
We need to engage the private sector. We need to be in a position where we recognize the size of the investments that have to be made. Too often in the past, the size of the investment has frightened people away from making any investment. We’re now in a period of time in which this country is making the kinds of investments that it’s unlikely ever to make in the near future again.
While we’re opening up the treasury, let’s not forget Indigenous people. Let’s allow Indigenous economic development to prosper so that we can start to contribute to the overall gross national product of this country. Let’s not let this opportunity slide by. Let’s look at the fact that we need systemic change in the relationship and begin to work on that, and not ignore the need for systemic change because of COVID-19.
The Chair: Thank you. To the witnesses, there is no doubt in my mind that we do have common denominators with our committee, and especially having had the mandate of the oversight committee for programs of COVID-19. There’s no doubt in my mind that it’s all about transparency, accountability, predictability and reliability.
We will continue our study. If you feel that there is any additional information that you want to send to our committee, please do it through Ms. Fortin, our clerk. In the next few months, we expect to table a report in the Senate of Canada.
Senators, this concludes the public portion of our meeting.
I would like to thank you, witnesses, for sharing your comments, your recommendations and giving us more information. It has been very informative and even instructive.
Honourable senators, before we resume, I would ask that you mute your microphones and close your cameras, but please be ready and be back at 5:20 p.m. EST. Thank you very much.