THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Thursday, April 22, 2021
The Standing Senate Committee on National Finance met by videoconference this day at 2:30 p.m. [ET] to study Bill C-14, An Act to implement certain provisions of the economic statement tabled in Parliament on November 30, 2020 and other measures.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Before we begin, I’d like to remind senators and witnesses to please keep your microphones muted at all times, unless recognized by name by the chair.
[English]
Should any technical challenges arise, particularly in relation to interpretation, please signal this to the chair or the clerk, and we will work to resolve the issue. If you experience other technical challenges, please contact the ISD service desk with the technical assistance number that was provided.
[Translation]
The use of online platforms does not guarantee speech privacy or that eavesdropping won’t be conducted. As such, while conducting committee meetings, all participants should be aware of such limitations and restrict the possible disclosure of sensitive, private and privileged Senate information. Participants should know to do so in a private area and be mindful of their surroundings.
[English]
Honourable senators, we will now begin with the official portion of our meeting.
My name is Percy Mockler, a senator from New Brunswick and chair of the committee. I would like to introduce to you the members of the committee who are participating in this meeting: Senator Boehm, Senator Dagenais, Senator Deacon (Ontario), Senator Duncan, Senator Forest, Senator Klyne, Senator Loffreda, Senator Marshall, Senator Pate, Senator Richards, and Senator Smith. Also joining us is the Speaker pro tempore of the Senate, Senator Ringuette, and the sponsor of Bill C-14, Senator Lankin.
I wish to welcome all of you and viewers across the country who may be watching on sencanada.ca.
Honourable senators, today we begin our study of Bill C-14, An Act to implement certain provisions of the economic statement tabled in Parliament on November 30, 2020 and other measures, which was referred to this committee on April 20, 2021, by the Senate of Canada.
Today, we welcome officials from five departments.
[Translation]
First of all, from the Department of Finance Canada, we welcome Maude Lavoie, Director General, Business Income Tax Division, Tax Policy Branch. She is accompanied by Dave Beaulne, Director General, Tax Legislation Division; Trevor McGowan, Director General, Tax Legislation Division; Lesley Taylor, Senior Director, Social Tax Policy; and Nicolas Moreau, Director General, Funds Management Division.
We also welcome, from Employment and Social Development Canada, Atiq Rahman, Assistant Deputy Minister, Learning Branch; and Steven Côté, Executive Director, Skills and Employment Branch.
[English]
From Health Canada, we welcome Edward de Sousa, Acting Assistant Deputy Minister and Chief Financial Officer; Jocelyne Voisin, Associate Assistant Deputy Minister, Strategic Policy Branch; Monique Frison, Acting Assistant Deputy Minister, Programs and Implementation; and Greg Loyst, Director General, Policy and Regulatory Strategies Directorate.
From Western Economic Diversification Canada, we welcome Barbara Motzney, Assistant Deputy Minister, Policy and Strategic Direction.
And finally, from the Canada Revenue Agency, we welcome: Randy Hewlett, Director General, Legislative Policy Directorate, Legislative Policy and Regulatory Affairs Branch and Karen Butcher, Director General, Business Returns Directorate, Assessment, Benefit and Service Branch.
We welcome all witnesses to answer questions from the senators. We’re going to briefly introduce each of the seven parts of the bill in turn. We will start with Mr. McGowan for Part 1, to be followed by officials of the departments.
The floor is yours, Mr. McGowan.
Trevor McGowan, Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance Canada: As noted, I will be providing an overview of Part 1 of the bill, which contains two measures.
The first measure provides temporary support to families with young children who are entitled to the Canada Child Benefit. To support these families, the bill would amend the Income Tax Act to provide, in 2021, up to $1,200 per child under the age of six to families entitled to the Canada Child Benefit who have a family net income equal to or less than $120,000. Families entitled to the Canada Child Benefit who have a net income above $120,000 would receive support of up to $600 per child under the age of six.
This temporary support would be provided as tax-free quarterly payments to eligible families. The first of these amounts would be payable after this bill receives Royal Assent, with subsequent amounts in the first month of each remaining quarter. In other words, that would be the end of April, July and October 2021.
To ensure consistent treatment for children under the care of a federal, provincial, territorial or First Nations child protection agency, the government also proposes to amend the Children’s Special Allowances Act to provide quarterly payments totalling $1,200, in 2021, for each child under the age of six who receives a children’s special allowance.
The second measure would amend the legislation related to the Canada Emergency Rent Subsidy program, which would include the lockdown support, if applicable, to provide eligible entities with access to the rent subsidy in respect of amounts payable. This would provide funds up front in order to have the cash to pay the qualifying expenses in respect of which the subsidies were paid to the entities.
There is a requirement that the eligible rent expenses be paid within 60 days of the payment to the eligible entity of the subsidy in respect of the expenses. This helps to maintain the integrity of the program to ensure that the relevant expenses are ultimately paid in a timely manner.
Thank you. That concludes my summary of Part 1 of the bill.
The Chair: Thank you, Mr. McGowan. Mr. Rahman, you may go ahead, if you’re ready.
Atiq Rahman, Assistant Deputy Minister, Learning Branch, Employment and Social Development Canada: Thank you, Mr. Chair and honourable senators.
Parts 2, 3 and 4 of the economic statement implementation act 2020 would waive interest on Canada Student Loans and Canada Apprentice Loans for one year, beginning on April 1, 2021, at a cost of $329.4 million in 2021-22. This measure is expected to benefit 1.4 million recent post-secondary and apprenticeship graduates who are facing financial impacts of the COVID-19 pandemic.
Thank you, Mr. Chair.
The Chair: Thank you, sir. We will move on to Mr. Loyst.
Greg Loyst, Director General, Policy and Regulatory Strategies Directorate, Health Canada: Good afternoon. I’m here to speak to Part 5, specifically clauses 9 through 11.
[Translation]
The ongoing challenges of drug and medical device shortages can have a major impact on the health of Canadians and our health care system. These challenges and associated risks have been exacerbated by COVID-19.
[English]
The proposed amendments included in this bill would enable Health Canada to build upon existing shortage management tools and put in place more robust instruments to help prevent or alleviate shortages. It would also allow for stronger regulatory oversight of health products being manufactured solely for consumption or sale outside of Canada.
The bill proposes amendments to the Food and Drugs Act that would clarify regulatory-making authority. In particular, the amendments would provide the Governor-in-Council with regulatory-making authority to seek additional information from companies about food, drugs or medical devices. For example, this could be used to require a person to provide information necessary to assess a drug shortage or its causes.
The amendments would also provide the Governor-in-Council with regulatory-making authority to help present or alleviate shortages of therapeutic products such as drugs and medical devices. An example in this case would be putting in place a regulatory framework that would enable the exceptional importation of drugs or medical devices when a shortage occurs.
[Translation]
Finally, the amendments would expand the range of activities related to food, drugs, cosmetics or medical devices manufactured for export that could be subject to regulation. For example, good manufacturing practice requirements could apply to drugs for export.
[English]
Honourable senators, this gives you a brief sense of the authorities sought. I would be happy to answer any questions you might have.
The Chair: Thank you, Mr. Loyst. The next section will be presented by Ms. Barbara Motzney.
Barbara Motzney, Assistant Deputy Minister, Policy and Strategic Direction, Western Economic Diversification Canada: Hello and thank you very much. I can speak to the beginning of Part 6, Payments, clause 12.
This is actually about businesses, communities and the families that ultimately benefit from support for firms and business organizations struggling through the pandemic.
This section establishes an appropriation that authorizes up to $206.7 million in 2020-21 to be paid out of the Consolidated Revenue Fund for the regional development agencies to provide additional support to small- and medium-sized enterprises across the country through the Regional Relief and Recovery Fund, RRRF.
The RRRF was launched in April 2020 as part of the COVID-19 Economic Response Plan as a backup to other broad-based programming. The RRRF helps small- and medium-sized enterprises whose basic liquidity needs are not addressed by other programs. It offers repayable contributions, akin to loans, to continue operations, sustain jobs and pay bills through the pandemic.
Since its inception, the fund has had tremendous demand, particularly in Western Canada. The regional development agencies have received, as of March 25, 2021, nearly 34,000 applications in the amount of $3.12 billion. Demand remains high. In March 2021 alone, we received an average of 635 applications a week from businesses and organizations across the country, requesting over $42 million.
I’m happy to answer any questions you might have about the program. Thank you.
The Chair: Thank you, madam.
Canada Revenue Agency, do you have any comments to make?
Randy Hewlett, Director General, Legislative Policy Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency: Mr. Chair and honourable senators, we do not have comments to make, but we will be happy to take questions on our administration of the Income Tax Act and Bill C-14.
The Chair: Are there any other presenters who would like to comment?
Edward de Sousa, Acting Assistant Deputy Minister and Chief Financial Officer, Health Canada: Thank you for the opportunity to provide some background on Part 6, specifically as it relates to the health measures in clause 13.
The specific clauses established an appropriation authorizing the payment out of the Consolidated Revenue Fund for the fiscal year ending March 31, 2021, on the requisition of the Minister of Health, all money required in relation to specific measures and amounts identified therein. The measures include those related to mental health and substance use in the context of COVID-19. That’s providing funding to support the Wellness Together Canada portal, which provides online mental health and substance supports for all Canadians.
We have investments in long-term care to respond to the significant challenges faced by long-term care facilities across the country; supporting innovative approaches to COVID-19 testing to look at innovative approaches to make the best use of testing and screening technology in Canada; virtual care and mental health tools for Canadians, which is supporting virtual care services so that Canadians can safely engage with providers through telephone, text, video conferences, to have their health needs met; and in medical research and countermeasures, which is to ensure that Canadians have access to drugs they need to treat symptoms of COVID-19.
Together, these measures total approximately $901 million.
The purpose of this section was to enable the Government of Canada, more specifically Health Canada, to make payments to advance these COVID-19-related files in a timely manner. Given the magnitude of the amounts involved, the department did not have the budgetary flexibility to make and manage these payments within its existing budgets until Supplementary Estimates (C) was granted. The statutory authority would have provided the ability to bridge the timing gap, and it allows the department to make payments and advance these important initiatives.
Thank you. I’d be happy to answer any questions.
The Chair: Thank you. We will now move to Mr. Nicolas Moreau before we move to questions.
[Translation]
Nicolas Moreau, Director General, Funds Management Division, Financial Sector Policy Branch, Department of Finance Canada: Part 7 proposes amendments to the Borrowing Authority Act and the Financial Administration Act. In 2017, the government reinstated parliamentary approval of government borrowing by introducing the Borrowing Authority Act and setting a maximum borrowing amount of $1,168 billion for the government and Crown corporations. Under that new framework, a first report on borrowing authority was tabled on November 23 last year and provided Parliament with an assessment that the maximum borrowing amount should be increased.
This bill fulfills that commitment and has three components. First, the introduction of this legislation proposes a new maximum amount of $1,831 billion. As presented in Schedule 2 of the Fall Economic Statement, this amount reflects the debt level as of October 31, 2020, as well as a projection of all government and Crown corporation borrowing activity for the next three fiscal years, plus a 5% precautionary cushion.
The second component is associated with debt incurred between April 1 and September 30, 2020. Under the exceptional borrowing authority approved by Parliament to fund emergency measures for COVID-19, any debt incurred under the exceptional borrowing authority is not limited by the maximum borrowing amount.
To increase accountability and transparency, the Borrowing Authority Act will be amended to make borrowing subject to the maximum amount. The final component of Part 7 includes consequential amendments to the Borrowing Authority Act and the Financial Administration Act so that in the future, money borrowed under the exceptional borrowing authority will be subject to the same reporting requirements as money borrowed under the Borrowing Authority Act. Thank you.
The Chair: Thank you, Mr. Moreau.
[English]
The Chair: This is the end before we now move —
Steven Côté, Executive Director, Skills and Employment Branch, Employment and Social Development Canada: Excuse me, Mr. Chair, would you like me to speak to clause 14 of Part 6? I can do that if you prefer.
The Chair: Please do now, and this will help with questions, Mr. Côté.
Mr. Côté: Absolutely. This clause 14 of Part 6 includes measures to establish an appropriation of $500 million to be paid out of the Consolidated Revenue Fund on the requisition of the Minister of Employment and Social Development, for the payments of the Canada Emergency Response Benefit, following the expiration of the Public Health Events of National Concern Payments Act on December 31, 2020.
The CERB was made so that workers who were unable to work or had worked significantly reduced hours due to COVID-19 did not have to choose between doing the right thing to stop the spread of the virus and make ends meet. Specifically, the CERB provided $500 per week for up to 28 weeks to eligible workers. Between April and September, the CERB was a critical lifeline for 8.9 million Canadians, and $81.6 billion had been paid to recipients. In the vast majority of cases, Canadians received their benefit within days of applying. While the program ended on October 3, 2020, Canadians had until December 2, 2020, to submit a retroactive application.
Unfortunately, some legitimate claimants have seen their application being delayed due to administrative and possible integrity issues, and while the Canada Revenue Agency and Service Canada are doing everything in their power to make the necessary verifications, some claims may not have been processed by the end of the year when the Public Health Events of National Concern Payments Act expired.
To ensure that Canadians received the benefits that they are eligible for, this act establishes the appropriation of $500 million to be paid out of the Consolidated Revenue Fund until March 31, 2021, to allow these payments to occur. Thank you.
The Chair: This concludes the presentations. Before we proceed to questions, I would like to share with the senators that today you will have a maximum of seven minutes each for the first round. Therefore, please ask your questions directly. To the witnesses, please respond concisely, and the clerk will make a hand signal to show that the time is up.
Senator Marshall: I will start off with questions on the limit for borrowing. That’s Mr. Moreau.
Mr. Moreau, I was looking at the chart in the Fall Economic Statement that’s on page 141. I’ve been working with that quite a bit. I did find it helpful. I found it a bit confusing where you started with October 31, 2020, rather than the beginning or ending of a fiscal year.
I just need some clarification. Mostly it’s technical questions. The $220 billion that is part of the $320 billion — I know the $320 billion includes $100 billion in stimulus. What is the $220 billion? Is that the budgetary requirements for the three years?
Mr. Moreau: Exactly. Basically, yes, those are the financial requirements that we had at the time of the Fall Economic Statement. The date is October 31, and the reason is because, at the time, that was the latest data that we had of the level. So we took stock of debt as of October 31, and we looked forward over the next three fiscal years. Overall financial requirements sum up to $320 billion, of which $100 billion was and is currently the stimulus.
Senator Marshall: Okay, so about that chart, which I said was helpful. Now we have a budget. Has that chart been updated with the new budget numbers?
Mr. Moreau: We have not published any numbers to the budget, but I can provide you with the numbers if you want.
Senator Marshall: You can send it to the clerk. That would be very helpful because I was trying to calculate it myself. I don’t know if you work on the budget too, but I went into the new budget and there is a chart there on page 324 and 325. It does have some updated numbers, so I was using those.
Has this $100 billion in stimulus spending — which was very controversial at the time when the minister released her fiscal update at the end of November — been fully allocated out? When I look at the budget, it shows a budgetary balance, it appears, before the $100 billion stimulus. Then it has a note: the statement as of December 2020 escalated restrictions scenario, and $100 billion stimulus. It looks like there are also numbers there to take into consideration the $100 billion stimulus. Am I reading that right?
Mr. Moreau: Yes. The stimulus could be calculated by adding — if you go to the budget, precisely to page 325 —
Senator Marshall: That’s what I’m looking at.
Mr. Moreau: The last line, action taken since 2020: if you look at the $49 billion, $28 billion and $23 billion and sum it up. It makes $101 billion, which gives the overall stimulus that has been implemented in the budget.
Senator Marshall: Okay, but do we have the specifics for those initiatives? It seems like we don’t have the specific initiatives yet, do we?
Mr. Moreau: The details are provided in the lines before from 1 to 10. Those are the only details that have been presented.
Senator Marshall: That’s it. Okay. I’ll be looking for more information.
Here is my next question. I was looking at the numbers. Now it seems like you’re very generous with your numbers. But have you looked at the Office of the Parliamentary Budget Officer? The office issued a report called Pre-Budget Outlook. They also projected the debt. It seems like their projections were higher than yours. It looks like their projections indicate it comes very close to the new ceiling that is proposed. Have you looked at the PBO projections?
Mr. Moreau: We did look at it; thank you for the question. Basically, those new numbers that we have shown are based on the private sector average survey that has been done with the private sector economics in Canada. We look at the strength in the economy. We looked at what would be the implication on the fiscal revenues and spending. At the end of the day, those are the figures that have been provided in the budget. We need to rely to these figures right now.
When we sum it up, the numbers and the updated numbers that you requested will be really close to what we’re asking. My number is $1,836 billion. We were requesting in the fall update at the time $1,834 billion. So it’s a question of $2 billion.
Senator Marshall: My last question relates to the contingency and the buffer of the 5%. Why did you take the 5% on the old ceiling? You took the 5%. You provided for a 5% contingency on the 1,168 three years ago. You used that. That debt is established now. Now, when you established a new contingency, you have taken 5% again on the old debt ceiling. Why would you do that? It seemed like you’re really being very generous — I won’t use the word “pad” — with the provisions. Why would you take the 5% on debt that’s already been incurred and not debt into the future? And 5% has been already provided.
Mr. Moreau: Thank you for the question. Basically, what we have done when we did put together the first limit, we looked at what should be the amount of buffer that we should put in, in order to have a prudence level that is reasonable.
When you look at the economic fluctuation, on the economic side and also on the fiscal side, we believe that 5% is reasonable. What we’re doing right now in the new limit is exactly what we did last time. We look at the current stock, the forecast over the next three years, and on top of this we put a 5% buffer.
Senator Marshall: Very generous.
Mr. McGowan, my question is about the Canada Child Benefit. I just want clarity. Reading the legislation and what the Library of Parliament has provided, do I understand it correctly that in order for any family to access any of those four quarterly payments, they have to qualify for the Canada Child Benefit according to their 2019 tax return?
Mr. McGowan: For the third and fourth payments, it would actually be in respect to the 2020 tax return. That would be for July 2021 and October 2020, as by those points a 2020 tax return would have been filed. The relevant year is 2019 for the first two payments, and 2020 for the second two.
Senator Marshall: Okay. For the final two payments, somebody who didn’t qualify in 2019 but who goes to the Finance Canada website and determines that they’re now eligible in 2020 because of the pandemic, and they’ve lost their employment, they can tap into the final two payments. Is that correct?
Mr. McGowan: Yes, the last two payments look at the 2020 income. If that income is lower, that could increase entitlement to the payments.
Senator Marshall: Thank you. I’m finished. Put me on second round, please.
The Chair: Thank you, senator. Mr. Moreau, you mentioned that you would provide additional information through the clerk, and I want to put a date on that with the time frame that we have to report to the Senate. If you could provide the information before or on April 28, please. Is that satisfactory?
Mr. Moreau: It’s not a problem; will do.
[Translation]
Senator Forest: My thanks to all the witnesses for being here. My first question concerns the $500.7 million envelope for CHSLDs. First, the Prime Minister states that this assistance will be conditional on certain quality standards. The Quebec National Assembly, through a unanimous resolution by all members from all parties, denounces the very idea of national standards and refuses to be told how to use this money when it is a provincial and territorial jurisdiction.
Will the $500.7 million in assistance still be conditional on certain safety standards? If so, what will those quality standards be and how will they be set, given the federal government’s very low level of expertise in this area of jurisdiction?
Perhaps Mr. de Sousa could answer?
Mr. de Sousa: Yes, I will start.
[English]
Thank you for the question. In the Fall Economic Statement, as you mentioned, senator, there was $1 billion over two years for the long-term care fund. That fund is to provide assistance to the provinces and territories, and they will be able to use that funding to undertake a range of activities: carrying out infection prevention and control readiness assessments; improving ventilation; hiring of additional staff; and topping up wages. To get more detail, I’ll turn it over to my colleague Jocelyne Voisin for further details.
Jocelyne Voisin, Associate Assistant Deputy Minister, Strategic Policy Branch, Health Canada: Thank you for the question. The safe long-term care fund that was announced in the Fall Economic Statement — that $500 million that we’re talking about here — our discussions with the provinces and territories so far on that funding is not tying it to long-term care standards. That discussion, I think, will remain open with the provinces and territories.
The jurisdictions may, of course, use this funding and will be encouraged to use this funding towards meeting standards. We know that in Quebec, for example, that all the facilities are accredited already, which is a great situation in Quebec, but they will be encouraged to use this to bring facilities standards up and address infection prevention control especially.
[Translation]
Senator Forest: So we are talking about encouraging, not requiring, if I understand correctly.
My second question is about some of the comments that have been made. First, I had really directed my attention to dividends. We have seen situations where some companies have received over $30 million in emergency COVID-19 wage subsidies. I recall one company in particular that took advantage of that to increase its dividends to shareholders by 7% and pay them over $56 million in dividends. This strikes me as completely immoral in the context of this pandemic, this emergency that is affecting highly fragile sectors.
Did you consider prohibiting the payment of dividends when companies receive the emergency COVID-19 wage subsidy? Why not include a prohibition of that kind as a condition for the emergency wage subsidy program during the pandemic?
Perhaps Ms. Lavoie could enlighten me on this?
Maude Lavoie, Director General, Business Income Tax Division, Tax Policy Branch, Department of Finance Canada: Thank you for your question. In the recent budget tabled with the bill we are considering, the government did not propose any amendments to that effect. It proposed other types of amendments, but none with respect to companies who pay dividends.
It’s important to understand that the program was set up with the objective of providing emergency assistance that would go as quickly as possible to employers so that they could retain or rehire their employees. In this context, the conditions were kept to a certain minimum to ensure more certainty in terms of payments. In particular, the program made sure that the employers who had received the subsidy would be those who had experienced a drop in revenue. We wanted to specifically target those who needed subsidies.
As far as new announcements go, there was nothing to that effect.
Senator Forest: It seems rather immoral to me that a company experiencing a decline in revenue would increase its dividends by 7%. This permissiveness makes me uneasy.
My next question is about mental health and the $64.4 million earmarked for that purpose. As I understand it, the funds will be allocated to Wellness Together Canada to create an online portal that will provide 24/7 support for Canadians’ mental health.
There are a whole host of Canadian organizations in the provinces and territories whose mission is to provide support through hotlines. Consider Jeunesse, J’écoute, Tel-Aide, Tel-Jeunes, Tel-Écoute, Centre d’écoute, 1-866 Appelle, etc. Now, a new organization is about to be created.
Why not make use of existing resources by pooling the efforts of community organizations already involved in the area, rather than creating Wellness Together Canada? It would be much more effective and faster.
Perhaps Jocelyne Voisin could answer the question?
[English]
Ms. Voisin: Thank you for the question. We have found that the pandemic has had a tremendous impact on the mental health of Canadians across the country, and there was a real need to address that. The Wellness Together Canada portal actually builds on existing expertise and organizations. It’s made up of a consortium of four organizations: Stepped Care Solutions is an interdisciplinary and cross-sector team of clinician researchers, leaders and pioneers in stepped care; Kids Help Phone, which you might be familiar with; Homewood Health is the Canadian leader in development and delivery of national, evidence-based mental health trauma and addiction treatment services.
There are other partners as well that are involved in Wellness Together Canada, including Greenspace, Bell Let’s Talk, Canada Health Infoway, the Mental Health Commission of Canada, Canadian Psychological Association and Medavie. So lots of partners and also links to provincial and territorial services.
Senator Klyne: Welcome to our panellists and thank you very much for your introductory remarks. My first question is for WD. The Bill C-14 legislation authorizes the Minister of Economic Development and Official Languages to access an additional $206 million for the Regional Relief and Recovery Fund, on top of the $1.5 billion announced in the 2020 Fall Economic Statement. As I understand it, WD was oversubscribed in the very first round of rolling out the fund in response to COVID-19, which is a clear indication of the need and uptake for the fund.
My first question is whether or not the oversubscription in the very first round, followed by the fund being replenished, if that replenishment was able to address those applications that missed out on the first round due to the overwhelming uptake, or did that leg of the program lapse?
Ms. Motzney: Thank you, senator, for the question and your interest. The uptake in the West has certainly been considerable. It has been a continuous intake of applications. There were no applications that lapsed or fell out of line in the process. We continue today to take on applications. As I indicated, there still continues to be a strong uptake as we continue to process.
Senator Klyne: Thank you. Will the amounts offered by Bill C-14 extend the program deadline beyond the current date of June 30, 2021?
Ms. Motzney: No. Applications have to be received by June 30, 2021.
Senator Klyne: Okay. The next question, the first part of it you may need to provide an answer to the clerk. Can you provide the committee with a regional breakdown of the uptake of the fund in terms of total numbers of businesses that have applied across the regional development agencies, and how many were successful with their application and how many were declined due to ineligibility or oversubscription? That would be the first part of that.
Ms. Motzney: We do certainly have that information, senator, and I would be happy to provide it. It’s probably easiest as a follow-up.
Senator Klyne: I appreciate that. The other question I had is what process did the regional development agencies use to determine which businesses would receive funding and those which would not as the fund approached oversubscription in the first round?
Ms. Motzney: There are criteria for eligibility in terms of being a small- and medium-sized enterprise in operation as of March 1. Because this is a backstop program, one has to have applied for and been declined or been ineligible for other mainstream programming like CEBA or the BCAP program initially. As we process now, we’re also including HASCAP in that. And you have to either have applied and been declined — [Technical Difficulties] — that applicants can receive is based on demonstrated need, which is through an operating deficit.
Senator Klyne: Okay. Thank you.
Mr. Chair, my next question is for CRA. The government made changes to the Canada Emergency Rent Subsidy process whereby tenants apply directly, instead of relying on landlords to apply, and importantly, to apply for the rent when due versus after being paid.
Prior to the changes, with landlords applying, the uptake on CERS was far below expectations. Can you tell this committee if the change to tenants applying has made a difference in terms of program uptake, and to what extent, and do you observe any other trends before and after the changes?
Mr. Hewlett: Thank you for the question, Mr. Chair. I can’t speak directly to why there has been an uptake in this version of the rent subsidy, CERS, versus the previous version. I can tell you, however, that it is quite a successful program, and the agency does publish the information with respect to the amount of the payments that go out under this particular program. That information is available publicly on our website. We can also follow up and provide you with that information if necessary.
Senator Klyne: Great. Thank you. That leads me to a second question in terms of publications. Why does the sixth round applications, covering February 14 to March 13 this year, only have half as many applicants than all other application rounds? Is this due to improvements in the economy or increased business closures?
Mr. Hewlett: We haven’t yet done any analysis of those figures to determine why there might be a different uptake. It’s too soon. But we will do that analysis and we can also follow up on that.
Senator Klyne: Okay. Thank you.
If I had time, Mr. Chair, I’d ask a question of Health Canada or I’ll save it for second round.
The Chair: Second round, please.
Senator Klyne: Thank you.
The Chair: To Ms. Motzney, Western Economic Diversification Canada, as Assistant Deputy Minister, you will provide that information that was requested by Senator Klyne to the clerk of the committee for all the agencies no later than April 28. Do we have agreement?
Ms. Motzney: Yes, Mr. Chair, absolutely.
The Chair: Thank you.
Senator Richards: I’m late, and I missed the meeting already. I’m not going to ask very much today, and I will give my yielded time to Senator Marshall if there’s a chance to do so later on.
Just to touch on what Senator Forest mentioned about dividends, I too feel that paying CEOs or executives dividends in this time of COVID with governmental bailout money is abhorrent. That’s all I’ll say, and I think most people would agree with me on that. If it’s happening, it shouldn’t be happening.
How seamlessly does Bill C-14 fold into the greater budget that was presented last week by the minister? Are there surprises in the budget that contravene Bill C-14 that you have recognized? I’ll ask anyone here who might be able to answer me. Thank you very much.
The Chair: Finance, please, would you have comments?
Mr. Moreau: Mr. Chair, maybe I can answer quickly. Like I said before, the amount that we — [Technical Difficulties] — are in line with what we’re expecting for the borrowing limit. Otherwise, I don’t know, and I don’t believe that there’s any other number or announcement that is different or should be raised at this point.
The Chair: Mr. McGowan, do you have comments following the two questions?
Mr. McGowan: No. I want to note that the amendments to the subsidies announced in Budget 2021 were developed with the — [Technical Difficulties] — C-14 in mind, and so they were designed to be integrated together as seamlessly as possible.
Senator Richards: That’s what I wanted to know. Thanks for your answer, Mr. McGowan.
[Translation]
Senator Dagenais: My first question is for Greg Loyst.
Bill C-14 makes amendments to the Food and Drugs Act to provide regulatory authority to the Governor in Council to prevent or alleviate drug shortages.
Can you give us examples of action that might be taken? What kind of exports could be targeted? What products that might be urgently needed could come from Canada?
[English]
Mr. Loyst: Thank you for the question. As a bit of context, shortages are a growing problem in Canada. We’re a small drug market, representing about 2% of global sales and we’re also heavily dependent on imports. About 68% of the drugs that we Canadians consume come to Canada in their final finished form.
One of the things that we’ve seen over the last number of years is an increase in the number of shortages and then shortages lasting longer, and this has really been exacerbated during COVID-19. For example, we have a tier system where we rank the severity of the shortages; tier 3 being the highest. This would be something where we would have national level intervention where there are few alternatives for drugs. We had 47 of those shortages last year, compared to 10 in 2019.
All drugs can be affected by shortages. It’s not any particular category. You could have cancer drugs, anti-depressants or antibiotics, so it does create a challenge, and it does create an impact both for the health of Canadians and then on the health care system itself.
In terms of the powers that are sought, a couple of examples of how they might be used; the regulation-making authority with regard to compelling information from a company. An example of this might be where there is a shortage going on and the minister has requested information from a company and that information is not forthcoming to the minister. Then the minister would have the ability to compel, and the type of information the minister might look for would be supply and demand information; information within the supply chain of a particular company. So it’s all information that would be related to how the minister could assess the shortage and then look at certain types of mitigation measures that would be put in place as a result of that.
When you look at alleviation measures, we can look at exceptional importation, for example. When we are faced with a shortage, which we have been a number of times over the last 12 months, in particular with COVID, we did put in place an exceptional importation measure through an interim order, so this is a temporary regulation. We’ve used that a number of times. We brought in about 60 drug products through that vehicle. Essentially, we’re bringing in drugs that are not approved for use in Canada but would be approved for use in our major regulatory partner jurisdictions that have similar standards of manufacturing practice, so from the U.S. or the European Union. This has allowed us to bring drugs in under a legal framework that would allow for these drugs to be infused into the health system and provide Canadians with needed medicines.
Another area in the alleviation space would be around the minister’s ability to impose terms or conditions on a drug authorization. This would be a market authorization holder which would have certain terms and conditions in terms of how they conduct their business. A small example might be that we would want to have regular reporting on inventory levels of a drug in shortage, and this would help us better manage the shortage and think about alleviation measures that might need to take place.
[Translation]
Senator Dagenais: My next question is for Mr. Moreau.
Mr. Moreau, you told us about increasing the cap limiting the government’s borrowing capacity. Despite the pandemic, we can’t help but notice that the increase — and you will correct me if I’m wrong — will be nearly $700 billion, a 60% increase.
Now, I will be direct with you. I’d be curious to know if people in the public service can challenge the numbers or the politicians, or if they acquiesce to every suggestion because you can blame it on the pandemic.
Mr. Moreau: Thank you for your question. Yes, you are right, it is an increase of close to $700 billion. You need to understand that much of that amount has already been borrowed on the markets in response to the COVID-19 pandemic; exceptional borrowing requirements were established.
Regarding your question on the ability to contest the numbers, I am not sure I can answer that or give a correct answer. You must understand that our numbers are mostly based on economic and financial calculations. Therefore, once policies are approved, we need to trust in the calculations and the results provided by the department and the other organizations.
Senator Dagenais: Can we describe the increase as temporary or will the current government and those who follow keep on having an “open bar”?
Mr. Moreau: Thank you for your question. It is an authority to borrow. We’ve heard that reference to an “open bar” before, but you have to understand that the money can’t be spent without authorization from Parliament. Parliamentary approval is needed for expenditures, and it is a separate process from the one we’re currently discussing.
Right now, we’re talking about the capacity to borrow. Therefore, it’s the total envelope within which money can be borrowed. However, that doesn’t mean that any expenses are approved. Expenses are approved through the budget process and the estimates presented to Parliament. In this case — as was the objective when it was introduced in 2017 — we want to be sure to remain transparent so that Canadians understand the total value of the debt on the market. That’s why the increase is being requested.
Senator Dagenais: Thank you, Mr. Moreau.
[English]
Senator Pate: Thank you to the witnesses and to the sponsor of the bill. My first question is for Mr. McGowan. If we have time, my second is for Mr. Côté.
Bill C-14 provides a temporary top-up to the Canada Child Benefit, as you mentioned. The Canadian Centre for Economic Analysis calculates that between 2016 and 2019, the CCB kept about 277,000 children above the poverty line, and that every $1 disbursed through the program to Canadian families has translated into a contribution of $2 to the GDP, amounting to 2.1% of Canada’s total GDP.
I’m curious whether you have any further data that you can add about the impact of the Canada Child Benefit, in particular during 2020 and the entire pandemic period.
Mr. McGowan: Thank you for the question. I see my colleague Lesley Taylor, who is with our personal income tax division and the policy lead for the Canada Child Benefit is on the call, so I would defer to her expertise on the numbers.
Lesley Taylor, Senior Director, Social Tax Policy, Tax Policy Branch, Department of Finance Canada: Thank you, senator, for your question. In normal years the Canada Child Benefit represents $25 billion of support paid directly to families with minor children. Within that you see about 3.5 million families receiving the child benefit each year, so it certainly has an important effect. And thank you for sharing those statistics on child poverty. The government certainly has in mind having an effect on child poverty with regard to introducing the child benefit and its current parameters.
In 2020, as the senators may recognize, there was an additional payment made to families through the Canada Child Benefit of $300 per child. That was in May of 2020, quite early in the pandemic, in order to provide an immediate support.
We would be happy to follow up with some statistics with respect to the number of those payments, total amounts, now that time has passed. Obviously, today, within Bill C-14, there is a proposal to provide an additional amount of support to families entitled to the CCB. That’s yet to be rolled out, so we won’t have data on that in terms of the exact number of recipients and payments made until after the end of 2021.
Senator Pate: So if that additional information could be provided, that would be very much appreciated. Thank you.
For Mr. Côté, the Canadian Centre for Policy Alternatives recently reported that, despite the government’s steps not to claw back benefits or charge interest in the 2020 tax year, 422,000 people who received the CERB will still be below Market Basket Measure poverty line. For 208,100 people, the need to pay taxes on amounts received through the CERB is what is keeping them below the poverty line. This situation will be even more dire for those in need who were encouraged to apply for the CERB under unclear rules during a pandemic, and now may be learning that they will be deemed not eligible.
The government’s amnesty for self-employed people who used gross, not net, income is expected to cover only part of the group of 440,000 people who have received letters about possible CERB repayments. First, could you confirm whether you have any numbers different than the CCPA’s on these points?
Second, when clause 14 was developed, was there any contemplation that the amounts budgeted toward continuing CERB expenses might be used to provide for the kind of amnesty on repayment or taxes recommended by organizations, including the CCPA? If not, are further measures being taken to provide for this? Thank you.
Mr. Côté: Thank you for the question. I don’t have any further information on the numbers you are requesting at the moment.
With respect to payments, I know that individuals have been directed to complete their taxes with respect to the next steps. I don’t have any further information with respect to the questions you have asked.
Senator Pate: Will that information be forthcoming at some point?
Mr. Côté: Information with respect to which aspect of the question?
Senator Pate: In particular, the CCPA has provided some numbers. If the government disagrees with those, I would be interested in getting the numbers that the government would provide.
Mr. Côté: I can take that back and do a response to the clerk.
Senator Pate: That would be fantastic. Thank you.
Senator M. Deacon: Thank you for all of the witnesses and the sponsor of Bill C-14 for being here this afternoon. This first question is to Finance or the CRA. It comes back to the rent subsidy that has come up a few times. My question concerns the rent subsidy, mainly the types of businesses that have been able to apply for it. We have heard recently of large corporations which have received money via the wage subsidy in the last year, but also undertook stock buybacks, and in some cases recorded dividend payments.
Many of the corporations, specifically telecom-type companies, have a large storefront presence. My question is, were businesses like Rogers and Telus and Bell able to apply for the rent subsidy? If so, do we know if they have received it?
Mr. McGowan: Thank you for the question. I would defer to my colleagues from the Canada Revenue Agency or maybe Ms. Lavoie on the policy side as to the numbers, who has applied and what we have seen.
I can speak to the design of the rules. The rent subsidy is available both in respect of rent paid and certain mortgage and other expenses associated with the cost of a property. Of course, whether or not a large business is renting might depend upon their particular structure or circumstances. A large business might have franchisees or they might own the locations or they might rent the locations, so there are a lot of different facts that can impact the analysis.
There is not an explicit prohibition — this is not necessarily related to this bill — on the size of a company that can apply for the rent subsidy. Rather, there are caps on the amounts that can be claimed, both in respect of the base rent subsidy itself and the lockdown support for companies that have been required to be closed.
I don’t know if Ms. Lavoie has any further information on specifics.
[Translation]
Ms. Lavoie: I don’t have the information with respect to businesses, but perhaps my colleagues from the Canada Revenue Agency could respond.
[English]
The Chair: Canada Revenue Agency, do you have any comments?
Mr. Hewlett: Thank you for the question. I’m not in a position at this moment to discuss specific taxpayers who may or may not have applied for the subsidies. There is a disclosure rule that permits the agency to disclose the name of taxpayers and amounts that they received for certain of these subsidies. That information is available on our website for anyone to do a search to determine which entities may have received subsidies and the amounts. You may have seen reports in the media about specific entities receiving things. That’s how the media gets its information; it’s through that particular website.
If the chair would like, we can follow up with a link to the committee members for that website.
The Chair: Please do, Mr. Hewlett, through the clerk. Hopefully before April 28, please. Do we agree?
Mr. Hewlett: Yes.
Senator M. Deacon: The other question is to Health Canada. It centres around Part 5 of the bill, specifically the regulations aimed at preventing and alleviating shortages of therapeutic products in Canada.
In listening to the sponsor speak the other day, it’s my understanding that we haven’t had to halt any exports yet. We know, however, that as the COVID-19 virus stays with us and changes, we will likely need to produce seasonal vaccines like we do for the flu. The government has announced we can expect some domestic production of these vaccines come the fall. I trust you will come to rely on this domestic manufacturer in the years to come.
My question is, can we source everything we need here in Canada to produce vaccines? If so, would these materials be subject to the same regulations mentioned above for other therapeutic products in Canada? Perhaps even more simply put, under these regulations, could we halt the export of our product needed for domestic vaccine production?
Mr. Loyst: Thank you for the question. Mr. Chair, I will try to navigate this. Some of it crosses over into other parts of the department for which I’m not responsible. Some of it crosses over into Global Affairs Canada, in terms of the export-import permits or the export restrictions. Health Canada regulates products that are brought to the market in Canada, so the export restrictions would not be something that would be done through Health Canada. It would be done through another department.
In terms of whether Canada has all of the elements required to prepare the vaccines, I can’t answer that, honestly, because again it’s not an area with which I’m familiar. Knowing the capacity, knowing the constituent elements of each of those vaccines and the requirements for making those is something that I just don’t have information on. Senator, we can certainly take note of your comment and go back to the department and see whether there are elements that we can answer, but I don’t have the expertise to answer those questions because they are outside of my purview.
Senator M. Deacon: Thank you.
The Chair: Mr. Loyst, again, I would like to remind you and every department that is here today that, when you provide the information, keep in mind that April 28 is the deadline by which we would like to have that information, or earlier. Do we agree, Mr. Loyst?
Mr. Loyst: Yes, of course, Mr. Chair.
The Chair: Thank you.
Senator Duncan: Thank you to all of the witnesses who are here, and may I say a special thank you to our staff who are supporting us during these difficult times. We greatly appreciate your efforts.
I would like to make a couple of observations leading up to my question, if I could.
I know the Child Care Benefit is administered through Revenue Canada. These other programs — Canada Student Loans, the rent, CERB — are application-based. I truly appreciate Ms. Lavoie has indicated these programs were rolled out rapidly. There was a tremendous need. Government responded quickly. To use the second-most overused phrase, public servants were able to pivot incredibly quickly.
My observation about this is that there are disparate circumstances throughout our country for these programs. For example, the Canada Student Loans Program; the Yukon and the Northwest Territories have student financial assistance programs already in place. The CERB was very much needed and applied in southern Canada to a greater degree. For rural communities throughout Canada, we saw news stories where the CERB had a less-than-positive impact on communities.
Long-term care, to my knowledge, throughout the North is all government-run. So my point about these programs is that there are differences throughout our country. I would like to ask for a written response by April 28, as the chair has asked, of a regional uptake of these programs. If we could have the program officers provide us with information in written form of what has been the application of these programs throughout the country. For example, how many outstanding student loans are we talking about from the North? What has been the uptake of the CERB throughout the country?
The reason I’m looking for this information — and I appreciate receiving it by April 28 — is I’m also looking for the witnesses to provide, perhaps in written form — or, Mr. Chair, you might want to direct this question generally. I’m looking for any efforts or initiatives that have been undertaken to evaluate the programs in the provincial-territorial context. For example, an evaluation of CERB may allow government to look more favourably or able to provide the information to work with Prince Edward Island on pivoting to a universal basic income or a guaranteed livable income, or the Yukon to undertake such a program, if we had the analysis of these programs.
First of all, I would like the regional breakdown. Second, I would like to know if there is an analysis being undertaken of the programs in order to enable provinces and territories to pivot to other programs. Thank you, Mr. Chair.
The Chair: Thank you, Senator Duncan. I’ll be asking Ms. Lavoie, Finance, how can you accommodate the comments made by Senator Duncan and then the questions? If you could guide us, and provide that information between now and April 28.
Ms. Lavoie: I think the senator was looking for information on a range of programs that may not reside within Finance. It may be a question actually for many of us on this call. I believe she mentioned the CERS and other programs in her response. So we’ll need to see how we can package that. I’m not sure at the present moment. It does seem to be far-reaching. Perhaps I misunderstood — [Technical Difficulties] — on all the COVID-related programs. Sorry, I misunderstood. It was on the CERB and on the —
Senator Duncan: If I can be specific, Mr. Chair. I’m looking for the breakdown of the Canada Student Loans and apprenticeship programs. Where are the outstanding amounts; which provinces and territories? What are we looking at? The rent program and the CERB, those three programs; a provincial-territorial breakdown.
The Chair: Mr. Rahman, you would have some comments also?
Mr. Rahman: Yes, chair. From the Canada Student Loans perspective, of course, we can provide regional breakdown of student loans. I would only mention that throughout the territories, Yukon participates in the Canada Student Loans Program, but the Northwest Territories and Nunavut do not. They receive payments directly from the government to support their financial assistance programs, but we can definitely provide a regional breakdown of Canada Student Loans and grants, as well as Canada Apprentice Loans update.
The Chair: Thank you.
Is that satisfactory, Senator Duncan?
Senator Duncan: That’s on the Canada Student Loans, thank you, Mr. Chair. That’s on the Canada Student Loans and apprenticeship program. The uptake of the CERB program?
The Chair: Ms. Lavoie, would CERB be under your jurisdiction?
Ms. Lavoie: No, that would not. In terms of the rent subsidy program, we can provide that information, however.
The Chair: Okay.
Is that satisfactory, Senator Duncan?
Senator Duncan: Thank you for the rent program, and I believe that CERB could be provided as well. I see Mr. Côté has taken his mic off mute.
Mr. Côté: Yes, so the CERB data is actually online for the uptake by province or territory, so I can make that link available to you as well.
The Chair: Thank you.
Senator Duncan: Thank you.
The Chair: Another question, Senator Duncan?
Senator Duncan: Yes, my follow-up question to getting that information was — and I’m not certain if any of our panellists can answer this — I’m looking to know if in any of these program areas there is an evaluation of the program underway to identify gaps, to identify success points, to identify areas where there might be greater provincial-territorial cooperation.
Mr. Rahman: If I could jump in for a second? So for Canada Student Loans Program, yes, there are periodic evaluations from time to time. They do identify gaps too. I’m not exactly sure if there have been attempts to look at provincial differences there, but those are also public documents, so we will definitely share links to those documents as well.
The Chair: Thank you. Following the witnesses and representatives of the departments, please assure that you can provide that to us before April 28 or the latest April 28.
Senator Loffreda: Thank you to our witnesses and panellists for being here. Yes, thank you to our staff for supporting us in these difficult times.
My question is for Finance Canada on the Borrowing Authority Act, for which we’re amending the limit on the borrowing from approximately $1.1 trillion to $1.8 trillion. Can you elaborate on the long-term debt strategy? We know that COVID-19 has had an impact obviously, but what extent of stress testing has been performed with respect to the $1.8-trillion borrowing limits now being requested; the impact on increased inflation or increased interest rates could have on this borrowing limit. Thank you for your thoughts and elaboration.
Mr. Moreau: I can take this question. Thank you very much for your questions.
I cannot refer exactly to which page, but I think that shock has been done in the latest budget. I think what has been done is a shock of 200 basis points on the expected rate moving forward. I can go back to the budget and potentially provide the correct page for you during this call.
That said, what we are doing in terms of issuing our debt is also really important. As you may know, we have been extending the maturity of our debt since the beginning of the crisis. We currently have about a six-year average term to maturity, so basically, every dollar of debt will mature every six years. That has been increasing over the last few months and will continue to increase with the strategy we have in place to around eight years.
We have been issuing a lot more longer-term debt. By that I mean 30-year debt and 10-year government bonds, basically in order to make sure that the rollover — so the debt that will come to maturity will be lower in the future, therefore lowering the uncertainty about interest payments moving ahead.
You should also know that in terms of debt charges, we’re currently at the lowest level as a share of GDP that we have seen for, I think, over 40 years — below and around 1%. The average debt charges, basically the interest paid on our debt, is around 1.5% right now. So when you look at our debt level as a share of GDP or any other measure, it’s really sustainable.
When you compare it to other G7 countries in terms of average debt to maturity, in terms of net debt to GDP, all those matrices really show that Canada entered the crisis in a really strong position, and despite the sharp increase in our debt level, we still remain below the level that is observed in those countries.
Senator Loffreda: Thank you. Discussing other countries and jurisdictions, what is your knowledge or experience with legislated maximum amounts of government borrowing in other jurisdictions? Does it decrease borrowing? Historically in Canada, what has been that experience if we look at maximum legislated debt levels?
I have done some research, for example, in the U.S. and in other countries of the Commonwealth, but I would like your thoughts and elaboration on that.
Mr. Moreau: Thank you for your question. To my knowledge, the only country that has a similar system, that is not exactly comparable, is the U.S., with a debt ceiling. What is important to understand is in Canada, once we reach the limit, we’re still allowed to reassure debt in the market. The debt that will come to maturity, we can still refinance it, and we can also borrow in order to pay the interest on that debt.
In the U.S., they have a stronger limit. It’s not a limit; it’s a ceiling, basically, where once you hit that level, they are not able to reissue any debt in the market. Therefore, they basically need to shut down the economy.
In Canada it’s different because at least we’ll be able, if we hit the limit, to reissue our debt and pay the interest. Also, if we’re in a situation that we believe is extraordinary, we can always use the extraordinary borrowing authorities, which was done at the beginning of the crisis in order to make sure that we are able to finance all the programs that we have put out there.
Senator Loffreda: Thank you for the answer. That was the reason I assumed the borrowing between April 1 and — [Technical Difficulties]. If we look in hindsight, do you feel it was a sound decision? How much was borrowed during that period of time? How will it be accounted for going forward? Will there be similar periods in the future that you foresee?
Mr. Moreau: Thank you for your question. Of course, I believe it was important to do it at the time. As you know, basically the economy has been shut down, and we wanted to make sure we had the capacity to finance all the programs. Throughout that period — we published a report on this on October 22, 2020 — we borrowed $286 billion under this period of extraordinary borrowing authority.
I need to also inform you that since March 23, the government has introduced a new extraordinary borrowing authority period that will lapse until Bill C-14 is approved, or until September 30 as we set up the extra borrowing authority that we have put in place.
Senator Loffreda: Thank you for the response. My next question is for Health Canada.
Since the start of the pandemic, the government has invested $250 million in virtual care and mental health tools for Canadians. In Bill C-14, we are looking to authorize $68.6 million for virtual care and mental health tools for Canadians.
Can you share or elaborate on the progress of this investment and on the additional amounts you are looking for us to authorize?
Mr. de Sousa: Thank you for that question, senator. Perhaps I will say some opening comments and then turn to my colleague Jocelyne Voisin for some additional details.
The item for virtual care included in Bill C-14 is part of an amount that was actually included in Bill C-4, which expired at the end of December last year. If you recall, Bill C-4 included this full amount. It expired at the end of December and the department had the opportunity to either include it in supplementary estimates for those additional amounts and/or in this case here, as we have done, we have included it in this bill to get faster access to the cash, to be able to move this initiative forward more quickly.
So it is still part of the $240 million that was approved in the past. It’s not an additional amount. It just happens to be a shift in the different bills. Perhaps with that, I can turn it over to Jocelyn for some additional details.
Ms. Voisin: Certainly. Of that $240 million announced in the Fall Economic Statement, $150 million is going to provinces and territories in the form of bilateral agreements to help them make sure that Canadians still have access to health care services through virtual care.
Seven of those agreements with provinces and territories have already been signed, and provinces are investing in areas such as secure messaging, file transfer platforms, secure video conferencing technology, remote patient monitoring, patient access to COVID-19 lab results, and back-end supports that are integrating new platforms and supports. So PTs are really working closely with us on this and looking to address these issues moving forward.
We’ve found with virtual care, we reached a peak of Canadians accessing it. About 60% of visits to health care providers were done virtually in April 2020, at the beginning of the pandemic. That has fluctuated a little throughout the pandemic, but right now it’s at about 40% of visits.
The Chair: Thank you, Senator Loffreda. Ms. Voisin, did I hear correctly when you answered the question, saying that you had seven provinces and territories that had signed on?
Ms. Voisin: Yes.
The Chair: Can you provide that information through the clerk by, at the latest, April 28, please?
Ms. Voisin: Absolutely. Those agreements are all available online, so we can provide the link.
The Chair: Thank you.
Senator Smith: My question is for the Canada Revenue Agency.
When the government revised the original rental assistance program in Bill C-9, it contained a major flaw. Businesses had to prove to CRA that they had prepaid rent in order to qualify for the program. The government did not pass an amendment in time but noted that an intention to provide an amendment would be sufficient for CRA to begin administering the program.
Could you confirm whether this amendment to the Income Tax Act stems from the error in Bill C-9? Has the CRA been administering this program since then, even though the amendment has not been approved by Parliament? Under what authority was this carried out?
Mr. Hewlett: Thank you for the question. It’s the CRA’s long-standing practice to encourage taxpayers to comply with the introduction of proposed tax measures on the assumption that the legislation for these measures will be enacted. This practice is consistent with our understanding of parliamentary convention as it pertains to tax measures, and more importantly, it helps provide consistency and fairness in the tax treatment of taxpayers, and eases both the compliance burden on taxpayers and the administrative burden on the CRA.
Senator Smith: I guess those are simple answers. Has the CRA been administering this program since then, even though the amendment has not been approved? It’s sort of a yes or no question.
Mr. Hewlett: Thank you for the follow-up question. Taxpayers file their applications on the basis of the existing legislation and proposed legislation. When the CRA reviews an application or receives an application, we take that application on the self-assessment basis, and we would generally pay out the amount claimed. We have no way of knowing when a taxpayer files their application whether the rent is paid or payable. So it’s prudent for the administration of that system to accept the applications if they do include amounts that are payable on the basis of their proposed amendment. So the short answer is yes.
Senator Smith: What percentages of businesses — [Technical Difficulties] — CERS when it was introduced because they needed to have paid rent to be eligible? It appears the whole point of the rental assistance program is to provide assistance to businesses that cannot pay rent in the first place. Could you help me with that?
Mr. Hewlett: Thank you for the follow-up question. I can’t speak to the administration of the previous program. My understanding is that was done under the Canada Mortgage and Housing Corporation, so I don’t have any knowledge specifically of that program. As it pertains to the policy reasons why government changed the program and introduced that measure, I would defer to my colleagues in the Department of Finance.
The Chair: Who from Finance could link to that question?
Mr. McGowan: Thank you for the question. I’m happy to discuss the policy rationale underlying the amendment in this bill that would allow prepayments of rent to qualify as rent expenses.
Perhaps it would be best to set some of the context and go back to the initial design of the subsidies, in particular the wage subsidy, which applies on the basis of amounts that have been paid as salary, and they’re paid on a reimbursement basis. So an employer pays $100 of salary expense, they’ve expended that salary, and then they apply for the wage subsidy after they’ve made the payment and collect — depending upon the rate and revenue decline — a subsidy delivered in the form of a refundable tax credit in respect of those wages that have been paid.
Senator Smith: Are you saying that basically it’s a similar process between the rent subsidy and the wage subsidy? My question was really focused on the rent subsidy.
Mr. McGowan: Absolutely. So when the rent subsidy was initially prepared, it was prepared consistent with the wage subsidy, and they share a lot of the same legislative skeleton. They are designed to work together and have a lot of the same concepts, both to help in the ease of delivery and reduce the compliance burden on affected taxpayers. So they have one system to go with for a lot of the points of the different subsidies.
When the rent subsidy was initially designed, it was designed on the same reimbursement model as the wage subsidy. That is to say you would pay your rent. After you had paid your rent in respect to a period, you would apply for the rent subsidy and then get a reimbursement.
That was the initial design of the rent subsidy, but after its initial release the department heard feedback from a number of stakeholders who said this would cause cash flow issues for the payment of rent, and that it would ease their cash flow in difficult times for the rent subsidy to be able to apply for the rent subsidy before they’ve actually paid their rent.
Hearing that feedback from stakeholders, the department moved to try to amend the initial bill — Bill C-9, I think — to introduce the amendment that we now have in Bill C-14 that would allow for an application for the rent subsidy before rent is actually paid, and then a requirement to pay the rent after receipt of the subsidy, but that could not be done in time. So we have it in this bill here.
That provides a bit of a background as to the historical design of the subsidies, how the rule was initially put out using the same repayment concept and structure as the wage subsidy, and then, based upon response heard from stakeholders, why it was changed to accommodate the prepayment model for the rent subsidy.
The Chair: I will now recognize the sponsor of the bill, Senator Lankin, for a few questions.
Senator Lankin: Thank you very much, chair. Let me add my words of appreciation to the panellists for all the hard work you’ve been doing over the past year. It’s heroic work. And, to the Senate staff who support the operation of these committee hearings. It’s important work and we appreciate it.
My question is to Health Canada, and it’s with respect to Part 5 and the regulation-making powers or authority to deal with drug shortages, to prevent drug shortages and/or to deal with the severity, duration, et cetera. It’s not about the provision itself.
I see Mr. Loyst has responded. I’m not sure if this would go to Mr. Loyst or Mr. de Sousa, but it’s about the background information to get an understanding.
In 2019, the briefing I received indicated that there had been 10 tier 3 drug shortages registered. For those who don’t know, tier 3 is the highest, most dangerous, most urgent category. Over the course of the past year, there have been 45 such incidents.
Could you give us any background on the nature of the drugs that we have seen in shortages, how that has been dealt with or corrected, and the cause of this? There is an indication that the demand for some drugs was three to four times higher than normal, resulting in competition for finite drug supplies. That’s one category.
Is there also a category of any supply chain problems or disruptions? Could we get a background on that?
Mr. Loyst: Thank you for the question. I think if we take a look at the last year for context, the pandemic has had a fairly significant impact on a number of things that cause or exacerbate drug shortages.
Early on in the pandemic, we saw significant supply chain disruptions around factory closures in places where we would receive a lot of drugs or active pharmaceutical ingredients and elements of the drugs, for example, in India. We saw some countries across the world put in place export restrictions that curtailed the movement of drugs.
We saw transportation hurdles when domestic flights stopped flying. Many people may not know that a lot of domestic flights have a huge amount of cargo flying with them, and you might have drugs coming in that way.
So transportation logistics, supply chain disruptions and inability to access were significant problems early on, and this resulted in some of the challenges around shortage.
With regard to higher demand, as you point out, senator, when we saw early hospitalizations as a result of COVID, there are particular drugs used to treat patients with severe symptoms of COVID-19, for example, sedatives, painkillers and things of that nature. When you’re going to be intubated, which many patients in the first wave had to be, you need to be sedated. We saw runs on drugs like propofol and other sedatives that were used in these procedures. It was not only here in Canada; this was experienced similarly across the globe. Conditions were such that you were seeing demand rise across the world, so finding these drugs was a bit difficult.
As to what causes shortages normally, there are a variety of things. You can have manufacturing issues that result in drug shortages. When you look at Hurricane Maria in 2017, there were a few drug manufacturing plants in Puerto Rico that went down for a number of months.
Right now we’re seeing many of the big drug companies focusing their priorities on certain drugs, or potentially vaccines, where they may de-prioritize other drugs, which causes a reduction in their market availability. So there are a number of things in place.
In terms of what we’ve done to manage this, I did mention exceptional importation as an example early on, where we’ve brought in drugs from other jurisdictions that are approved and have the same standards as those used here in Canada that would not otherwise be authorized.
There is a multi-stakeholder approach to managing drug shortages. There is both FPT and international engagement. We engage with the pharmaceutical and health industries and with hospitals to get a sense of the landscape — where there are drugs, where drugs can be moved around and where we can bring in alternate supplies to alleviate some of the pressures that result from the higher levels.
I’m not sure if I’ve covered every part of your question. If not, please remind me and I’ll make sure I hit on some of the points I may have missed.
Senator Lankin: Mr. Loyst, thank you very much. That did cover the background information I was interested in on the shortages. I’m sure there is further detail that the department will be working on to try to ensure prevention of this in the future. But it is, as you indicated, a global issue.
Let me come to the other side. You talked about the program of importations. We have also seen the Minister of Health put in place a regulatory provision. This particular regime, which was first passed in March of last year under the COVID-19 Emergency Response Act, has now run out with the sunset clause, and now this is being brought back retroactive to that sunset clause date.
About a month after the United States put in place a program to allow pharmacies and others in a state program to bulk import drugs from other countries — Canada, for example — the Minister of Health put in a regulation that would allow Canada to prevent that if it was in danger of creating or worsening a shortage, in a severe manner, for necessary and important pharmaceuticals.
My understanding from when I was briefed is that this power has not had to be used. While I realize GAC, Global Affairs Canada, will be involved in the broad answer to this, I’m interested in the discussions, through the embassy, with the United States, our partners on this. This provision was brought in by the U.S. prior to the change in administration.
Has there been a change in the intent of the States in terms of using this? How many of our allies and state partners around the world have put in place provisions like this and seek to import to theirs, export from ours, bulk amounts of drugs?
Mr. Loyst: To my knowledge, senator, the U.S. is the only jurisdiction that has put in place a program of this nature. We haven’t seen it in other jurisdictions around the world.
With regard to whether there’s been a change, pre- or post-administration, in the United States, the answer is no. The program is still on the books. The regulation is in place in the U.S.
We have been following this closely with our colleagues at the embassy in Washington and at the consulates across the United States. There are now a number of proposals before the Department of Health and Human Services. One of the steps along the way is that states have to put forward proposals that the Department of Health and Human Services would have to approve before they could undertake an attempt to import drugs in bulk from Canada, and those are drugs that would normally be intended for the Canadian market.
As you point out, on November 27, the Minister of Health did put in place an interim measure that would prevent the export of prescription drugs intended for the Canadian market, should that export cause or exacerbate a shortage here in Canada. It’s not limited to the United States. This would be generally. So for any program that might be put in place around the world, this provision would be there. The idea is to safeguard the Canadian drug supply and ensure that Canadians have access to the drugs they need and that they’re not subject to additional pressures on drugs here in Canada from programs such as this.
With regard to the Canadian position, we’ve made it clear. In terms of the regulatory process that was undertaken in the U.S., Canada did provide comments where it indicated that it would oppose any type of program that would put in danger the health of Canadians and, in particular, the drug supply of Canada. That hasn’t changed over the course of time.
The Chair: Thank you, Senator Lankin.
In the second round, the chair will recognize Senator Marshall, to be followed by Senator Ringuette, who is replacing Senator Forest.
Senator Marshall: I want to go back to the response that Finance and the Canada Revenue Agency gave Senator Smith with regard to the rental program. The amendment is going to allow the government to reimburse business owners for their rent before it’s actually paid.
Did I understand from the response that payments are already being made to businesses to pay their rent in advance, before the legislation is approved? Could somebody from Finance or the Canada Revenue Agency clarify that for me, please?
Mr. Hewlett: Thank you for the question. Yes, we are administering that draft legislation on the basis that it is proposed. When applicants apply for their rent subsidy, they file an attestation that they will pay their rent within 60 days of receiving the subsidy, which is also a requirement of the legislation. Should they fail to do that, then they won’t be eligible for the subsidy.
Senator Marshall: Are you saying the payments are already being made?
Mr. Hewlett: Yes.
Senator Marshall: Before parliamentary approval of the bill?
Mr. Hewlett: The legislation is in place for the rent subsidy and it has passed. This particular amendment allows applicants to apply for the subsidy before they have paid it but when the amount is due, provided they pay it within 60 days after receiving the rent subsidy.
Senator Marshall: Aren’t you assuming the bill is going to be passed? If you’re already making those payments to businesses in advance, thinking that the bill is going to be approved, aren’t you getting ahead of yourself? I don’t understand. The whole purpose of this is for the government to get parliamentary approval of its spending, but you’re telling us now that those advance payments are going out to businesses before the bill has received parliamentary approval.
Mr. Hewlett: Thank you for the follow-up. As I noted, the base legislation authorizing payment for the rent subsidy is enacted.
Senator Marshall: Yes, but this makes provision for it to be paid in advance. I mean, if you’re already doing it, what do you need us to approve this for? Why bother? You’re already doing it.
Mr. Hewlett: I understand your question and concern, but as I noted, it is a common practice when it comes to tax legislation to administer the legislation in draft form. It provides for ease of administration, and it reduces compliance burden on taxpayers. It is consistent with the agency’s long-standing policy.
Senator Marshall: But you don’t have parliamentary approval to do it. That’s the point. We just heard Mr. Moreau respond to Senator Dagenais about the limit of the borrowing. He’s saying, yes, but just remember this is a limit for the borrowing. This is not spending approval and spending. Everything that the government spends, you have to go back and check for parliamentary approval. Based on what you’re telling me, you’re making payments without the proper parliamentary approval. I’m wondering why we are bothering. We don’t need to approve this section of the bill because you’re already doing it.
Mr. Hewlett: I note your point. Thank you.
Senator Marshall: It’s terrible. I still have another question about it. How do you ensure that the payments are actually used for the intended purpose? You’re making the advance payments — and I guess it’s like an honour system — but is the government going to go back and make sure that these payments were actually made for the intended purpose?
Mr. Hewlett: The agency does have prepayment verification procedures in place. Following payment, it has audit processes in place where it will verify payments under the rent subsidy program, like all programs administered by the agency, on a risk basis after analyzing particular claims.
Senator Marshall: Okay. Thank you. On the student loans, would you know how this is going to be reported in the public accounts? Is the interest going to be applied to student loans and then we will see the writeoff of the amount that’s approved by this legislation, or will the interest never be recorded? It just won’t be recorded.
Mr. Rahman: Thank you, senator. Part of it is that the interest that government pays on these loans, that is primarily paid through the Consolidated Revenue Fund and overall government borrowing, so it’s difficult to separate this part of interest. For example, you referred to writeoffs. You will see a slightly lower writeoff; the interest part of it for the accounts that will be written off.
Senator Marshall: Okay. That’s very helpful. Thank you very much.
The next one is for the representative from the Western Economic Diversification Canada. Will there be any follow-up done on the loans? Are these loans or are they outright grants? Will there be a follow-up carried out after? Any auditing procedures, evaluations, things of that nature?
Ms. Motzney: Thank you for the question, senator. Because these are loans until December 31, 2022, the process is that there will be a mid-term report provided by applicants and then a final follow-up during the repayment process. In order to process the repayment, discuss with the client and get the money repaid, there will definitely be a follow-up done there. As a federal government program, there will be an evaluation of the program upon its completion. I would imagine there will certainly be audits done on these programs as well.
Senator Marshall: Okay. Will this show up as statutory or voted?
Ms. Motzney: Some of the funding was statutory and some of it has been voted, so it will be a mix of both, but clearly indicated.
Senator Marshall: Okay. Thank you.
To follow up on Senator Pate’s question on the CERB money, is the $500 million just for outstanding applicants? I wasn’t quite clear. Is there something in there for forgiveness of payments that were made in error, or are these all new payments for processing?
Mr. Côté: The money for CERB is just for processing payments.
Senator Marshall: Okay, so there’s nothing there to forgive. No forgiveness there.
Mr. Côté: No, this isn’t forgiveness. The way CERB worked, it ended on October 2, but you could apply retroactively until December 2. This extension of funding is to pay for those additional payments.
Senator Marshall: Okay. On the borrowing, Mr. Moreau, right now the Bank of Canada is buying some of the government’s bonds, and because of the magnitude of the increase in the borrowing limit, are you able to tell us anything about whether the Bank of Canada will be continuing to purchase this debt?
[Technical Difficulties] — continue on with $3 billion a week, I think. Could you answer that? Also, give us some idea of who is buying the bonds if it’s not the Bank of Canada.
Mr. Moreau: Thank you for your question.
The bank announced yesterday that it will reduce the quantitative easing program. This is a program where it has been buying government debt to the extent of $4 billion a week since the beginning of the crisis. Now it is tapering; it is going to $3 billion a week moving ahead. This is a signal that the bank will continue to reduce its buying as the economy will recover. So right now, it announced it will continue to focus on the long end, buying $3 billion a week in the market.
So far since the beginning of the crisis, the bank has bought something around $240 billion of our debt, and overall, the Bank of Canada holds about 35% of the debt in circulation from the government. Who else buys our debt? When you look at the composition, foreign buyers represent about 20%. Otherwise, it’s institutional investors, pension funds or Canadians through their mutual funds. Basically, the debt is mostly 80% held by Canadians and 20% held by foreigners.
Senator Marshall: Thank you. That’s very helpful.
Am I out of time now?
The Chair: Yes, you are, Senator Marshall. Thank you.
Before I recognize Senator Ringuette, I have a question for Mr. Hewlett. As I was listening to the questions from Senator Marshall, you said that when we look at — the question was on parliamentary approval — that you would note “the point.” I would ask you for clarity: What do you mean by you saying, “you would note the point”? Would you bring this to the attention of the proper deputy minister?
Mr. Hewlett: Yes, we will. As I noted in my earlier responses, it has been a long-standing agency practice to administer certain types of draft legislation like this before enactment, because it provides ease of administration and it facilitates compliance. But I will note the senator’s disagreement with the agency’s practice, and I’ll be sure to inform our deputy minister of such.
The Chair: Could your deputy minister bring it to attention before April 28, as we’re moving to table a report in the Senate of Canada? Is it possible that we could have a legal opinion for what you’re doing versus parliamentary approval and just taking a note?
Mr. Hewlett: I will take it back.
The Chair: You will take it back, okay.
Mr. Hewlett: I can’t promise there will be a legal opinion forthcoming within that time frame, but I’ll take the concern and the request back.
The Chair: Thank you, Mr. Hewlett.
Senator Ringuette, thank you. You’re replacing Senator Forest. The floor is yours.
[Translation]
Senator Ringuette: It’s always a pleasure. Being here brings back memories of some good years.
[English]
We’ve been talking about the expenses for that period of time. However, I believe that we need to also have a look at the other side of the ledger, in regard to the revenue side of the ledger, to better understand what is happening in the economy to justify these expenses.
So are you able to provide us with the income tax, the excise tax and the GST that was expected but that never materialized in the federal coffers for that period of time?
[Translation]
Mr. Moreau: Perhaps I can attempt to answer the question, but sadly I don’t have the expertise to do it. Your question is truly what we call [Technical difficulties] so what we expected before the crisis and what we realized during the crisis. The tax policy people at the Department of Finance Canada would really be able to answer the question. I suggest that you send the question to them in writing and they can respond within the required time limit.
The Chair: To whom should we send the question directly?
Mr. Moreau: It can be sent to the Assistant Deputy Minister, Nick Leswick, in the Economic and Fiscal Policy Branch.
The Chair: Thank you.
Senator Ringuette: Those data were nowhere to be found in the budget presented to Canadians on Monday. It does contain data on anticipated revenue for 2021 and they are expecting increases, but we don’t know in relation to what. I feel we need to have that picture to really understand the economic situation. Thank you very much.
[English]
My other question is with regard to clarification of previous questions. The first one is with regard to a question that was asked by Senator Forest in regard to dividends paid by corporations that received financial help through the different COVID programs. He was talking about dividends paid to shareholders, but my understanding is that it was stated by the federal government that businesses whose executives had paid themselves performance bonuses for that period of time, those bonuses would be clawed back from any kind of federal subsidy through these COVID programs. So, could you please clarify, because that is very important; it’s a major difference.
[Translation]
Mr. Moreau: I don’t believe that question is for me. I believe Ms. Lavoie turned on her camera. Could she answer the question?
[English]
Ms. Lavoie: In the budget that was tabled on Monday, the government announced that for corporations that will claim the subsidy from June to the expected date of the program — end of September — that for these corporations, if they are increasing the salaries of their top executives — and so in the current fiscal year, compared to 2019 — they may have to repay this increase if they have received wage subsidy payments.
Senator Ringuette: Okay. That’s exactly my understanding. So it has nothing to do with the increase of dividends to shareholders, it’s not included in the overall assessment of that subsidy.
Ms. Lavoie: What the government announced was related to the compensation of top executives.
Senator Ringuette: Okay.
My other clarification is in regard to health and the exportation of drugs. I have always understood, mostly in regard to our U.S. export, that we were talking about generic drugs that were made in Canada. Now, am I wrong in that assessment? Can you clarify, please?
Mr. de Sousa: Thank you for the question, senator. I believe Greg Loyst would be best positioned to answer that question.
Mr. Loyst: With regard to the type of drugs that are exported, the provision in the act that’s being amended here relates to the measures of oversight that would be put on drugs manufactured for export, whether they be generic brand or whatever they are. It really is just about making those drugs subject to regulation. Right now, they are subject to specific things set out at the level of the act. What we would look to do with this regulatory-making authority is make regulations that would prescribe certain oversight measures around safety and quality that would apply to drugs for export — those drugs manufactured solely for consumption or sale outside of Canada. I don’t know if that answers your question, but that’s how this provision is going to work.
Senator Ringuette: Okay. Well it kind of clarifies. I have a general comment in regard to all the different issues that have been brought. I’m a firm believer that we need to have clear, measurable and transparent objectives in order to identify the measure of success of a given program. In that vein, I certainly reinforce Senators Pate’s and Senator Duncan’s requests in regard to evaluation.
The Chair: As we look at the time frame that we have in the balance for this meeting, I would like to name the other senators that will be recognized. Senator Boehm?
Senator Boehm: I apologize for being away from the meeting. I received my vaccination and I’m now a Moderna man.
I wanted to pick up on a number of points — I suspect most have been asked — and Senator Marshall just asked the question I had on bond purchase. But I have another one, and chair, please stop me if this has already been asked. This is for whoever wants to take it from Health Canada.
It’s in regard to item 5 in the payment limits schedule for the requisition of the Minister of Health relating to isolation sites. I am wondering, given all the controversy about quarantine and hotels and all of this, if someone could tell us more about the funding that is allocated to the mandatory hotel quarantine, and for what it is paying, given that the idea behind this policy is that travellers bear the cost and that taxpayer money not be used. Or is the isolation site funding for those who test positive and have to go somewhere? If I could have some clarity on that, I would be grateful.
Mr. de Sousa: Thank you for the question, senator. I’ll start by clarifying. That item that we see, which is labelled “Medical research, countermeasures, vaccine funding and development,” is a holdover from the item that was included in Bill C-4 last year. This amount that we’re seeing here today, for Health Canada, is specific to ensuring that Canadians have access to drugs to treat the symptoms of COVID, so it has nothing to do with — [Technical Difficulties] — but that specific item.
[Technical Difficulties] — the isolation sites are a Public Health Agency issue and I’m not sure that anyone on the call here would be able to answer the question.
Senator Boehm: In fact I had asked the question when we were looking at Bill C-4 as you might recall. But that helps a lot. I wasn’t clear, and the clarity helps. Thank you. That’s all I have.
Senator Klyne: This question is for Health Canada. I believe Senator Dagenais was asking about Bill C-14 proposing changes to the Food and Drugs Act to increase the minister’s powers to request information. I’d like to have a look at this from another angle. Can you please provide this committee with the cost estimates on the increased resources required to implement and support what may be a large increase in the Minister of Health’s powers?
Mr. Loyst: Thank you, Mr. Chair. With regard to the increase in burden, it’s expected to be minimal. Right now it must be said that we have a good relationship with our regulated entities. A lot of the information is provided voluntarily. We want to continue to work down that path. Our first course would always be to have voluntary submission. There are requirements within the regulations that industry has to comply with, and then when there is additional information, there is usually a voluntary submission.
The type of information the minister would be looking for would be information that would be within the possession of the entity. It’s not that we would be causing them to create new information or go and do big research studies or things of this nature. It’s information that would normally be held by the entity and then just them providing that information in a timely manner.
This power would be subject to regulation making. There will be a consultation that is undertaken with industry, if this amendment were to pass, when a regulation would come forward, whereupon we would do a full cost-benefit as we do with all regulations that are made in the government.
Senator Klyne: Thank you. Mr. Chair, another question?
The Chair: One please.
Senator Klyne: Okay. I have a question for ESDC. Senator Duncan was inquiring about the student loans and apprentice loans. I want to highlight that the provision in Bill C-14 does not apply to the provincial portion, which will continue to incur loan interest depending on the loan holders’ home provinces. Some provinces have interest-free student loans and some have prime plus. Canadians are told education is an investment, yet students typically realize student loan debt averaging between $15,000 and $30,000, depending on the level of education being pursued.
Has the federal government discussed with those provinces still charging interest about providing summer leave in interest on student debts? A second question: In the interests of the increased attainment of post-secondary education and skills development, and the government investing in the same, has there been any consideration of offering a prime rate student loan or continuing interest-free loans into the future?
Mr. Rahman: Thank you, senator, for the question. The interest rate for Canada student loans was reduced to prime in 2019. For this year, of course, there will be no interest charged as per this legislation, and the budget announced that would be extended for another year, meaning until March 2023.
Beyond that, interest rates used to be prime plus 2.5%. That was reduced to prime in 2019.
With respect to your first question, we do consult our provincial partners all the time, but as you know, they do have policy authorities on their loans and their student aids. Some of the provinces have done that. Others have not. But that’s up to them to decide.
Senator Klyne: Thank you.
Senator Smith: I wanted to follow up with Finance Canada on the Children’s Special Allowances Act — Canada Child Benefit. Of course, it provides families with a net income of $120,000 or less with four payments to $300, and if you earn more than $120,000, you will get a smaller amount, which I believe is $600 a year. My question was quite simple.
Did you consider some form of sliding scale? Imagine that someone who has two children and earns $115,000 will be getting the same benefit as someone earning $60,000. Now, imagine somebody earning more than $120,000; should they even get access to this type of aid or support?
I’m wondering if you could share with us some of the rationale that went behind this decision. Really, my question is: Wouldn’t a sliding scale have made more sense in terms of the equity of the program, point number one, and the cost of the program, point number two?
I see everyone is excited about answering the question, chair.
Ms. Taylor: Thank you, Senator Smith, for the question. Yes, the design of the measure in Bill C-14 involves two levels of support. One would be for those with a net family income above $120,000 a year, and that’s the $600 that would be available. For those with a net family income below $120,000 per year, there is the higher amount, which is $1,200, as you stated.
One other important detail, in terms of the eligibility criteria, is that a family will only be eligible to receive these payments if they’re entitled to the Canada Child Benefit. The Canada Child Benefit is an income-tested program where the amount you’re entitled to declines as your income increases. The very highest income Canadians will not be receiving this amount essentially. If your income is too high to be receiving the Canada Child Benefit, you will not be receiving the supplementary payment under the design the government has proposed.
I note your point about a gradual decline. In fact, the Canada Child Benefit is designed so that there is a gradual reduction rate as income increases. That’s probably the more typical way we would design a program of this nature, but in this case, the government has provided these two amounts. It results in a simple and easy-to-understand structure.
The other thing in play is that it was for the Canada Revenue Agency to administer. They’ve obviously had a tremendous number of demands put on their plate with respect to administering benefits. Piggybacking on the existing CCB system provides them with a degree of efficiency. This year, they’re also going through a transformational IT project. Administrative constraints regarding what was available in short order fed into what was feasible.
I know there are colleagues from the Canada Revenue Agency on the line. I don’t want to put you on the spot, but I also don’t want to speak for you. If there’s anything you want to add, please do.
Hopefully, Senator Smith, that addresses your question.
Senator Smith: I, like most senators, are supportive of what the government has done at this point. However, there is going to be a time when we have to figure out how to continue to manage the best possible way to serve Canadians. My only point was that I think it’s important for the various departments to find and explore, and maybe this has already been done, as many options as possible to benefit Canadians, while realizing that there is an economic reality to everything we do. We certainly don’t want to burden our grandchildren with debt that they’re going to have to pay in 30 or 40 years when we’re all dead. That was just my little sermon in the name of the father and the son. I’ll end it there.
Senator Pate: Thank you again to the witnesses.
I want to mention some of the evaluation issues before I ask my question. When you’re looking at the evaluation, we’ve heard a lot of anecdotal information about employers who are saying young people in particular weren’t taking jobs. I’ve heard from a number of individuals who received CERB that when their employers couldn’t afford to pay them, because they didn’t have sufficient resources, a number of employers encouraged their employees to get CERB, and many of those young people actually volunteered to continue doing the work. When you’re doing an evaluation, I hope the qualitative analysis includes that type of information, not just the more negative anecdotes.
Now, on to my question. The Canadian Centre for Economic Analysis suggests that expanding on the success of the Canada Child Benefit by extending CCB measures to working-age adults through a guaranteed livable income could have similar positive economic effects over five years. Some of those would include increases in GDP of 1.6% and 2.4%, the creation of between $46 billion and $80 billion in new government revenues, and between 298,000 and 450,000 new jobs.
The Office of the Parliamentary Budget Officer has also said that a guaranteed livable income could cut poverty in half within one year, at close to net zero costs.
Both this committee and its counterpart in the House have recommended that the government give urgent consideration to a guaranteed livable income as part of its COVID response. What steps have been taken within your various departments to assess the feasibility of such initiatives, particularly in light of P.E.I.’s clear and express interest in launching implementation in their province? Has the government arrived at any numbers different than the Canadian Centre for Economic Analysis and the Office of the Parliamentary Budget Officer? If so, what are they? If you don’t have them today, please provide them at a later date. Thank you.
The Chair: Senator Pate, to whom did you direct your question?
Senator Pate: I think to all the departments, but let’s start with Finance.
The Chair: Finance, subsequently can you provide an answer, at the latest, on April 28, please? Mr. McGowan?
Mr. McGowan: I work in the Tax Legislation Division, which implements income tax changes and not economic analysis or the kind of policy that would study this sort of thing. I will have to bring that to people higher up the chain or in different branches who might be doing this.
I can commit to inquiring, but it’s well outside of my area.
The Chair: Thank you very much, Mr. McGowan, for bringing it to the attention of the proper professionals.
Please remind them that we would like to have an answer by April 28, if it’s possible. That will give us the proper time to complete our report to the Senate. Thank you.
We will move to Senator Lankin, the sponsor in the Senate.
Senator Lankin: My question is for Mr. Hewlett. It follows questions from Senator Marshall with respect to the emergency rent subsidy.
I have two questions. First, I want to ensure that I understand the provision here and the change from what was announced in the Fall Economic Statement. When this was first announced last October, the provision recognized that eligible entities, which included businesses, charities and not-for-profits, would be eligible for a subsidy when it had been paid. What has been incorporated into this legislation is that they would be eligible for such a subsidy, if it is an eligible expense, when it comes due as opposed to when it is paid.
I’m asking the question because one of Senator Marshall’s questions touched on the issue of the difference between, for example, a debt ceiling, a borrowing authority and actual authorization to expend monies through budget estimates and supplementary estimates.
My understanding is that this doesn’t change the program costs or program expenditures. It is an operational issue of when the application can be made and for what period it is eligible for, so it moves it by about 30 days. If I am to put it into the simplest terms that I understand, it was you could apply once you had sent the cheque to the landlord, and it’s now you can apply once you get the “rent due” notice. Let’s put it that way.
Is my understanding correct, and if not, could you correct me and give us a better understanding of that?
Mr. Hewlett: Thank you for the question, senator. You are correct. This provision allows a person to apply when the amount is due provided they pay it within 60 days after receiving the subsidy. When they apply, they must attest that they will do that. This does not change the overall cost of the program or doesn’t increase the amount of the expenditure. It merely pays the amount to them as an advance, if you will, so that they can then pay the rent. Without the subsidy, many businesses would not be able to pay the rent, so it’s what comes first.
My colleague Trevor McGowan spoke to the policy intent behind this. This really facilitates cash flow for small businesses and others who did not have the ability to pay their rent, but it does not change the overall cost of the program.
Senator Lankin: Thank you. And as I recall it at the time, there was a large voice from businesses and from charities and not-for-profits about how the original design was unworkable, wouldn’t help a lot, and the government announced, very quickly I thought, that they would accommodate this by going to the date that it’s payable, and that was announced on November 12. We’ve sort of known that they were doing this, and it was announced at that time that they would accomplish it through administrative procedures at CRA until such time as the legislation was passed.
Now, I believe that’s the bigger point raised by Senator Marshall and it’s somewhat shocking, as a parliamentarian who thinks that they have some responsibility to pass legislation in order for these programs to be delivered, to know that CRA operates in that way. Some of that happens with respect to certain tax provisions announced in a budget and how that will work. This is a slightly different case, but could you provide us with some case examples — not case studies — of when this prepayment while awaiting passage of legislation has occurred in the past? Are there any examples where such measures have not inevitably been passed by parliamentarians, and government has had to go back and make corrections or find some solution to the problem that they might have created by proceeding?
If you don’t have examples today, I’d appreciate if they could be sought and sent to the clerk, along with the instructions to the chair, by April 28, and if it’s not too much of an administrative burden, to go back 10 or 15 years. I think there might be more which has happened during the COVID period because of the nature of the emergency of getting supports to people who need them right now. I’m not sure of that, but I’d appreciate a longer look. [Technical Difficulties] — I think is an issue that will exist outside of this bill, and it’s something this committee might want to consider in the future with this broad practice, what it serves and what problems, if any, there might be.
Mr. Hewlett: Thank you, senator. If I may make a comment, I am not aware of specific examples exactly like this one, but there have been numerous examples in the past where agencies, when it comes to administering draft legislation for tax measures, do administer them in draft form to facilitate compliance, to facilitate administration and to make it easier for taxpayers. There are numerous examples of that in the past.
If there is a case where the legislation should not be passed, then the agency will work with taxpayers to ensure that they bring their tax affairs back in line in compliance with the legislation that is actually enacted, which we would do in this particular case if the legislation didn’t pass. Because this is an example of merely prepaying and it’s not increasing the expenditure, if the legislation didn’t pass by the time we would have reviewed a taxpayer’s return, they would have paid their rent and it would be rendered moot. That is one of the factors that went into the agency’s decision to administer this particular piece of legislation in draft form. However, we’ll take a look at your request and we will endeavour to get the information, if it does indeed exist, back to the committee.
Senator Lankin: Thank you very much. I would like to see those examples.
As I recall, the government did announce that they were going to proceed with this on an administrative basis because of the urgency and the cry from small businesses and other organizations in need of this subsidy at this point in time to keep the doors open. I would like to see any examples like that and, as I said, if there is any example of where legislation hasn’t been passed, post the administration of the provision, that would be helpful to see too. Thank you very much.
Mr. Hewlett: Thank you, senator. I would just add as well that you are correct, this was in the draft news release for this particular legislation and the agency was specifically requested by the Department of Finance if it would be able to administer this particular legislation in draft form owing to the urgency of getting money out there during this difficult time.
The Chair: Thank you.
Senator Lankin and Mr. Hewlett, I note that Senator Marshall did ask questions prior to your exchange and the question from Senator Lankin, and I have taken note that Senator Richards had given the balance of his time to Senator Marshall, which is three minutes. I will now ask Senator Marshall, before we conclude with Senator Dagenais, do you have any additional comments or a question vis-à-vis the comments made and questions asked by Senator Lankin, and comments and answers made by Mr. Hewlett?
Senator Marshall: The entire question here rests on the requirement that money not be spent without parliamentary approval, and that’s an underlying requirement of all the spending we do. In Finance Committee we quite often go back and say: What is the legislative authority for spending this, what is the legislative authority for spending that? I’m astounded to hear now that there are payments being made by the Canada Revenue Agency without the required parliamentary approval. If there were cases in the past that have been done without proper parliamentary approval, those issues are also a problem.
I’m not questioning the merit of the program. I’m questioning whether the Canada Revenue Agency had the proper parliamentary approval in place. In respect of parliamentary approval, we’re not just going through the motions. It is a requirement of Parliament to approve all spending and in this case it wasn’t done, and now I hear there may be other cases. I’m very concerned about this.
The other issue it brings up is this: If the Canada Revenue Agency is going to be changing the program and spending this money without the requirement in place, why bother bringing this amendment before the Finance Committee? I saw the Finance Committee in the House of Commons spend time on that amendment, and now we’re spending time on the amendment, and now I find that it really didn’t matter. It’s a complete waste of time, and I think there will be other people who will be very concerned that money has gone out the door without the proper parliamentary approval.
I think that we should have Treasury Board come and speak to us about this issue because I think that if there are other examples of this, there is a major problem in the government.
The Chair: Thank you. I do not want a debate, and I think the situation has been given due diligence both from the Finance Committee and also from the professionals. Mr. Hewlett, you have taken under advisement that you will look at some questions and that you will come forth with answers. Please do it and thank you very much.
On this, the comments made about asking for Treasury Board, we have a common denominator. You’ve heard me say this, and we must be mindful of it often. The objective that we have, it is about transparency, it is about accountability, it is about predictability, it is about reliability.
[Translation]
Senator Dagenais: I have two short questions for Mr. Hewlett.
Mr. Hewlett, given the impact of the pandemic and the temporary closure, perhaps even permanent, shutdown of some Canadian businesses, has the Canada Revenue Agency provided the government with an assessment of income tax that will not be paid or likely never be collected, and the effect that will have on the government’s cash flow?
[English]
Mr. Hewlett: Thank you for the question, senator. I do not have that information available, but I can tell you that the agency does look at outstanding tax debt, and we are aware that tax debts might increase as a result of circumstances surrounding the pandemic. But I can assure you that the agency will make every effort to collect that debt. But we have not embarked upon that analysis yet.
[Translation]
Senator Dagenais: With your permission, Mr. Chair, I have one last question.
We know that income tax is a hot topic right now. Why doesn’t the federal government do what the Quebec government is doing and give Canadians more time to pay their income tax and interest that will be due at the end of next week?
[English]
The Chair: Mr. Hewlett or Mr. McGowan, do you have an answer for that question?
Mr. Hewlett: Thank you for the question. Sorry, Mr. Chair, I do not have that information available, so I’m unable to respond.
[Translation]
Senator Dagenais: All right, thank you.
[English]
The Chair: Thank you. Honourable senators, as we come to the adjournment of our meeting, I would like to take the opportunity as chair, as per our order of reference; we have had an outstanding meeting, a great meeting with questions from the parliamentarians and answers from our professionals. We have a due date. We’ve asked steering, to the officials, that we would like to have those answers at the latest by April 28. That will put us in a position to deliver on our order of reference by tabling the report on Bill C-14.
Thank you, Senator Lankin, the sponsor, for being present. On this, honourable senators, before I do adjourn, I would like to share some information with you. If you have any comments, please do.
To the officials, first, thank you for your professionalism, and thank you for having accepted our invitation.
Before we do conclude our meeting, I would like to mention that, based on the current health situation in the National Capital Region and the recommendation of the Senate leaders, steering has agreed to modify the committee schedule for the study of Bill C-14 to reduce the amount of travel for staff assigned to committee meetings. This is why our next and last meeting on Bill C-14 will be on Friday, April 30, where we will first meet with witnesses representing businesses, most specifically the hospitality sector; to be followed by Minister Freeland, the sponsor of the bill and the budget; and we will wrap up the study during that day with clause-by-clause consideration. The report should be presented to the Senate of Canada on May 4.
Honourable senators, I am open for comments, and if not, we will adjourn and you can contact the clerk and we will give you additional information. But this is why we have requested and we’re sharing with you that as per the leaders of the Senate, and also as per the health challenges that we have with COVID-19, we have asked that you consider the meeting going forward on April 30.
I see that I have one senator raising a hand. Senator Deacon, any comments?
Senator M. Deacon: Thank you to the chair for that information. The assumption is the reduction of meetings and having a longer meeting and trying to get all of our work done.
You said some of the topics and the guests. Could you please clarify what you see as the estimated start and finish that day? Thank you.
The Chair: I will ask the clerk, please, to bring clarity to it.
Maxime Fortin, Clerk of the Committee: The meeting is scheduled to start at 12 noon and end at 5:30 p.m. There will be a break between — [Technical difficulties] — and again in between the minister’s testimony and clause by clause, about 50 minutes between the two.
Senator M. Deacon: Thank you. We will have our Wheaties and our coffee.
Senator Lankin: This is just a quick question with respect to the witnesses that are being brought forward. You probably didn’t go through the extensive list of them, but you mentioned business, particularly the hospitality sector — hospitality and tourism maybe you said. I’m wondering if you are able to shed light on why that sector is being brought forward. There are a number of — [Technical Difficulties] — people affected by the provisions in this bill. Is there a particular reason for bringing forward the perspective of this one, but very important, sector that you’ve mentioned?
The Chair: Thank you for the additional information and clarity. I will ask the clerk to share the other witnesses that will be coming.
Ms. Fortin: For that specific meeting, the committee invited the Canadian Chamber of Commerce, the Hotel Association of Canada, the Canadian Federation of Independent Business and the Canadian Council for Aboriginal Business.
Senator Lankin: If I may, Mr. Chair, I think there is an imbalance in terms of the voices that will be heard, and maybe the steering committee could take a look at that. Thank you.
The Chair: Thank you. If you have any suggestions, senator, please bring them to the attention of the clerk and steering will certainly take it under notice.
On this, honourable senators, thank you. A job well done on both sides, to the professionals and to the parliamentarians.
(The committee adjourned.)