THE STANDING SENATE COMMITTEE ON SOCIAL AFFAIRS, SCIENCE AND TECHNOLOGY
EVIDENCE
OTTAWA, Friday, May 14, 2021
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 9:00 a.m. [HE], by videoconference, to study the subject matter of those elements contained in Divisions 21, 22, 23, 24, 28, 29, 32, 33, 34, 35, and 36 of Part 4 of Bill C-30, An Act to implement certain provisions of the budget tabled in Parliament on April 19, 2021, and other measures, and, in camera, to consider a draft agenda (future business).
Senator Chantal Petitclerc (Chair) in the chair.
[Translation]
The Chair: Good morning, everyone, and welcome to this meeting. I am Chantal Petitclerc, senator from Quebec. I have the pleasure and privilege of chairing this meeting by videoconference of the Standing Senate Committee on Social Affairs, Science and Technology. Before we begin, I’d like to share several suggestions so that our virtual meeting is efficient and productive.
[English]
First, we ask that you keep your microphone muted at all times unless you are recognized by the chair. As you know, you are responsible for turning your microphone on and off during the meeting. Before you do speak, please wait until you are recognized by name. Also, please use the raise-hand feature. Before you speak, please pause for a few seconds to let the audio signal catch up to you and for translation.
[Translation]
If you experience any difficulty at any time, please let me or our clerk know. A technical assistance number has been provided.
[English]
We may need to suspend the meeting if anyone requires technical assistance or if we have any sort of technological challenges because we need to ensure that every member is able to participate fully.
Finally, I want to remind all participants that Zoom screens should not be copied, recorded or photographed.
[Translation]
Without further delay, I would like to introduce the members of the committee who are participating in our meeting. Thank you, dear colleagues, for being here.
We welcome the deputy chairs of the committee, Senator Frum and Senator Bovey, and Senator Black, a member of the steering committee. We also have with us Senator Dasko, Senator Forest-Niesing, Senator Kutcher, Senator Manning, Senator Mégie, Senator Moodie, Senator Omidvar and Senator Moncion.
Good morning, everyone. We are continuing our study on Bill C-30, and we are examining Divisions 23 and 28 of the bill. Our first panel will start with Division 23, which amends Part III of the Canada Labour Code to establish a federal minimum wage of $15 per hour and to provide that if the minimum wage of a province or territory is higher than the federal minimum wage, the employer is to pay the higher minimum wage.
I now welcome our witnesses. From Employment and Social Development Canada, we are pleased to welcome David Charter, director of the Labour Program, and Sébastien St-Arnaud, manager of the Labour Program. I invite Mr. Charter to make his presentation.
[English]
David Charter, Director, Labour Program, Employment and Social Development Canada: Thank you. Good morning.
My name is David Charter. I’m the director of the Research and Innovation Division at the Labour Program at Employment and Social Development Canada. I’m here today with Sébastien St-Arnaud, the manager of policy development at the Labour Program. We’re here to discuss the proposed amendments to Part III of the Canada Labour Code in Division 23 of the Budget Implementation Act, related to minimum wage.
Part III of the Canada Labour Code establishes minimum working conditions such as hours of work, annual vacations, various types of job-protected leave as well as setting the minimum wage for employees in the federally regulated private sector. The federally regulated private sector includes about 6% of all Canadian employees employed in industries such as banking, telecommunications, interprovincial and international transportation, federal Crown corporations and certain activities on First Nation reserves. Part III of the code does not apply to the federal public service.
Currently, Part III of the code sets the federal minimum wage as the general minimum wage established by the province or territory in which the employee is usually employed. The mandate letter of the Minister of Labour includes the commitment to raise the federal minimum wage to at least $15 per hour. Budget 2021 announced this legislation that amends Part III of the Canada Labour Code to establish a federal minimum wage of $15 per hour, which would rise with inflation and with provisions to ensure that, where provincial or territorial minimum wages are higher, that wage will prevail.
The new minimum wage would be in force six months after Royal Assent. To ensure that the federal minimum wage remains relevant and rises with inflation, on April 1 of each year after the year the amended minimum wage provisions come into force, the new minimum wage would be adjusted based on Statistics Canada’s Consumer Price Index for the previous calendar year.
I’ll conclude by mentioning that our estimates are that there are approximately 26,200 employees in the federally regulated private sector who currently earn less than $15 per hour and would benefit from the new minimum wage rate.
With that, I’ll thank you very much and be happy to answer any questions you might have.
The Chair: Thank you very much for your opening remarks. We will begin with questions from our deputy chairs.
Senator Frum: I’m interested to know what type of consultation that you’ve had with the provinces and with premiers on this amendment and if there is any response to a suggestion that this might be interfering in provincial jurisdiction?
Mr. Charter: Thank you very much for your question.
Through the Canadian Association of Administrators of Labour Legislation, which is a DM federal-provincial-territorial committee of deputy ministers, and also through the regular meetings of federal, provincial and territorial ministers responsible for labour, the topic of minimum wage is on the agenda from time to time.
As far as how this might impact provincial minimum wages, of course, these amendments to Part III of the Canada Labour Code will be putting in place the $15 minimum wage for the federal jurisdiction, but in the provincial jurisdiction, the provincial minimum wage rates will continue to apply.
Senator Frum: Has there been consultation with the premiers on this? As you imply, there will presumably be a spillover effect on provincial legislation. I’m interested if there were consultations done with the provinces.
Mr. Charter: Like I said, during the regular federal-provincial-territorial deputy ministers meetings and also the federal, provincial and territorial meetings of ministers responsible for labour, the topic of minimum wage was certainly on the agenda from time to time. I’m not specifically aware of whether there were consultations directly with premiers, but there were certainly conversations at the federal, provincial and territorial level with ministers and deputy ministers during those regular meetings.
Senator Frum: Thank you. Can we presume that there was approval and an endorsement from those provincial deputy ministers?
Mr. Charter: I wasn’t at those specific meetings, but, like I said, the federal minimum wage only applies in the federal jurisdiction and it doesn’t impact provincial minimum wage rates. I’m not aware of any objections that were raised with respect to the federal government setting a free-standing minimum wage in the federally regulated private sectors.
Senator Frum: Thank you.
Senator Bovey: I want to thank our witness.
I’m going to carry on the line of questioning that Senator Frum undertook with regard to consultation, and I will widen my question on consultation. Was there consultation with other sectors and other governments? If so, what was the consultation process with employees and with people impacted by this? I’d be really interested to know. You mentioned that 26,200 federally regulated private sector employees would be impacted by this. Can you give us a sense of the jobs that would be included?
Mr. Charter: I’m happy to answer both of those questions.
I’ll start with the question about the consultations conducted with respect to the minimum wage. There were two rounds of fairly comprehensive consultations that took place. The first were in 2017 and 2018 in the context of the then-Minister of Labour’s mandate commitment to modernize federal labour standards. Consultations were undertaken with a wide variety of stakeholders on a number of topics, including the federal minimum wage. Also, in 2019, the then-Minister of Labour appointed an expert panel on modern labour standards to look at five issues, one of which was putting in place a federal minimum wage.
Starting off with the 2017-18 consultations on modern labour standards, it was a pretty comprehensive process where we had an email to stakeholders, an online expert discussion forum, an online public consultation page that included an online survey and the opportunity to provide written submissions. In addition, there were high-level round table meetings held. There were divergent views on the question of minimum wage. Over three quarters of respondents to the online survey supported a free-standing federal minimum wage, but this wasn’t a representative sample. Unions, labour organizations and advocacy groups were in favour of a free-standing federal minimum wage. Employers were opposed and raised concerns about potential negative consequences for business and the fact that a free-standing federal minimum wage might not take into account regional economic differences.
Next, I’ll talk a little bit about the consultations of the expert panel on modern labour standards in 2019. That independent panel consulted over 140 workers, civil society groups, unions, labour organizations, employers and employer organizations, as well as experts. That was between February and June 2019. Again, we saw that unions, labour organizations and civil society groups supported a minimum wage of $15 in the federal jurisdiction, where employers expressed concerns and preferred to maintain the status quo whereby the minimum wage was set based on the provincial or territorial minimum wage rate in which the employee worked.
Now I’ll move on to your question about which types of occupations would be affected by this. We’ve developed some estimates, and the types of occupations we expect to be impacted are jobs like airline ticket and service agents, transport truck drivers, pursers and flight attendants, some material handlers, some other customer and information service reps, customer service reps in financial institutions, some technical sales specialists in wholesale trade, some air transport ramp attendants, as well as some types of bus, subway and other transit operators, and a few delivery and courier service drivers. I will say that, of the 26,200 occupations, 12,600 of them are “other” because the numbers are just too small to disaggregate into specific occupational groups.
Senator Bovey: Thank you.
I wonder if, going forward, will you be able to track those smaller groups? I’m presuming — and that’s a dangerous word, I suppose — that the pandemic has brought to light what some of those other occupations are, and we need to be very aware of what they are as really important employees during these times of crisis.
Mr. Charter: It’s certainly true that the pandemic has shone a light on lower-wage essential and vulnerable workers and their importance. Of course, we could certainly conduct or redo this analysis whereby we look at which occupations make either less than a minimum wage or at the new rate, or any other rate we might want to have a look at. So yes, we could certainly update this analysis and intend to.
Senator Bovey: Thank you, Mr. Charter. I appreciate that and look forward to those numbers.
Senator R. Black: I want to carry on the conversation and just ask the question: Is there a plan to ensure, encourage or assist the provinces and territories to adjust the minimum wage for provincially regulated sectors so that it mimics this minimum wage federally?
Mr. Charter: Thanks very much.
I guess I would just start off by saying that these specific changes to Part III of the Canada Labour Code will be putting in place a $15 minimum wage for the federally regulated private sector. This change will only impact the federally regulated private sector.
As far as whether provinces and territories might choose independently to increase their minimum wage, I can’t really speak to whether they might choose to do that or not, but certainly the federal-provincial-territorial meetings of ministers of labour and also of deputy ministers of labour will continue to meet, and meet on a regular basis, and the minimum wage has been, and I suspect would probably continue to be, a topic of conversation at that table.
Senator R. Black: Thank you.
How was the $15 rate determined? Is there data behind this decision that’s publicly available?
Mr. Charter: Thanks for your question.
There are a number of reasons behind setting the rate at $15. I guess the first one I’d start off with is that the mandate letter of the Minister of Labour included a commitment to set a minimum wage of at least $15.
In addition, over time, many stakeholders have been calling on the federal government to put in place a $15 free-standing federal minimum wage. Here I’m thinking of campaigns like Fight For $15 & Fairness.
Like I said, we also consulted stakeholders in 2017 and 2018 as part of consultations to look at modernizing labour standards. The expert panel on federal labour standards also consulted quite a number of stakeholders. As I mentioned, unions and labour organizations supported putting in place a minimum wage of $15 per hour. Although not a representative sample, we also had an online survey where respondents supported a free-standing federal minimum wage.
In 2019, that expert panel came out with their final report that also recommended putting in place a free-standing federal minimum wage that would be adjusted annually. So this measure certainly responds to that.
Finally, to give a sense of how the $15 rate compares to provinces and territories, minimum wage rates in provinces and territories currently range between $11.45 in Saskatchewan and $16 in Nunavut. Setting the federal minimum wage at $15 per hour, if it were in place today, would put the federal minimum wage ahead of or on par with every jurisdiction, with the exception of Nunavut whose minimum wage rate is $16 per hour. As I was mentioning in my remarks, these changes also include provisions to ensure that, in that case, that higher provincial rate would prevail and employees in that jurisdiction would be paid $16.
Senator R. Black: Thank you for your answers.
[Translation]
Senator Forest-Niesing: I’d like to thank the witnesses for being with us and answering our questions so fully.
We’ve heard this before, and we know how much the cost of food and other necessities of life has increased as a result of the pandemic. We also know that there has been and will continue to be a very high rate of business failures of all sizes. In particular, we know that the airline industry has been hit very hard, especially regional airports, which have suffered losses of 90% of their revenue with fixed costs.
You talked a little bit about the consultation process. I would like to know if, in your consultations, you did a comparative study of the economic effects of this measure, on the one hand to assess the economic growth of the workers who will benefit from it, versus the additional economic risks that this measure will pose to the companies concerned.
Mr. Charter: Thank you for your question.
[English]
For some reason, my interpretation isn’t working, but I think and I hope that I’ve understood all of the aspects of your question.
Maybe I’ll try answering it in a few parts and just say that, as I mentioned, certainly there are employees in federally regulated industries that will be impacted by this. You named a few. What I’ll say is our analysis suggests that there will be employees impacted in the road transport sector but also the non-road transport sector, which you mentioned, as well as postal and courier, banking, telecom and broadcasting. I also mentioned that a number of occupations, like airline ticket agents and service agents, which is an industry you flagged, will be impacted, as well as transport truck drivers, pursers, flight attendants also in air, material handlers, other customer and information service reps, customer and service reps, technical sales, air transport, bus and subway.
You also asked about the costs to businesses and the impact on businesses.
Senator Forest-Niesing: Actually, if I can stop you there just to specify my question. I was particularly interested in whether your consultation process had addressed or aimed to compare the economic effects or impact of this minimum wage on businesses in comparison to the benefits that it will provide to individuals.
Mr. Charter: Certainly the independent expert panel on modern labour standards, I believe, did look at those details. The analysis I have in front of me right now that we conducted to get a sense of the impact on employers, for example, by size suggests that of the 26,200 employees that will benefit from this federal minimum wage, roughly about 4,000 work for employers who have fewer than 20 employees, so smaller businesses, and 4,400 of those work for employers who have between 20 and 99 employees, who are also smaller businesses, but 3,500 work for medium employers who have 100 to 500 employees. The bulk of those 26,200 employees are working in larger businesses who have 500 or more employees, so 14,200 of the 26,200, or 54%, work for these larger employers. We did look at the cost impact on those larger employers, and our estimates are that to cover the salary to bring these employees up to $15 per hour, if there are no additional changes to hours or other labour force adjustments, that the cost to all federally regulated employers in the first year would be about $44.1 million, or 0.1% of the total annual federally regulated private sector payroll.
Senator Forest-Niesing: One final question to bring us back to what I’m trying to get at: Earlier, in answering Senator Black’s question about how $15 was arrived at, you mentioned some studies and an expert panel. It seems all of that was prior to the pandemic. I am wondering if you have measured the impact of the pandemic in determining the amount of $15 and specifically if you have considered whether employers that have already been hard hit by the pandemic might be put in a precarious position. Also, have you evaluated whether $15 is sufficient to cover the additional cost of living that has increased since the beginning of the pandemic?
Mr. Charter: As far as the consultations addressing the pandemic, as I mentioned, the first round of consultations was in 2017-18 and the second round was in 2019. Those obviously took place before the pandemic struck, but the impact figures that I pointed out or went through for various-sized employers and related to the costs were developed using labour force survey micro data that are somewhat recent. Those may include some figures that were derived during the pandemic period, but it probably wouldn’t account for the entire impact of the pandemic.
Senator Dasko: Thank you, Mr. Charter, for your great answers. They’re very detailed. This has been really helpful.
I have a couple of questions. First of all, just looking at the approximately 26,000 workers who will be affected, you mentioned some of the occupations. Can you tell us something about the demographics of the workers who might be affected in terms of gender, age, race, background, region or any others? Do you have any information on who these folks are outside of their particular occupations?
Mr. Charter: Certainly. I’m happy to answer that question.
For the 26,200 employees, 15,500 are men and 10,700 are women. When it comes to age, 8,300 are less than 25, 13,900 are between 25 and 54, and 4,000 are 55 and over. Also, we’ve calculated that about 16,700 are Canadian, whereas 9,500 are recent immigrants.
I’d say that most of the employees are in Ontario and Quebec. Of the 26,200, 73%, or almost 20,000, are in Ontario and Quebec. None are in B.C. and Alberta. Alberta’s minimum wage is already $15, and British Columbia’s minimum wage is expected to increase next month to just over $15, to $15.20, if I’m not mistaken.
Senator Dasko: Thank you for the answer.
I have another question that gets back to the topic of the impact on other sectors. I am just going to try to approach it in a different way. When you’ve done your economic research — and I’m talking now about from the past — we’ve had questions about what the impact is on the provinces and so on, but from your past economic research, are you able to say what impact the increase in the federal minimum wage has had on a couple of things? One of those might be the provincial minimum wages going up after a federal minimum wage goes up. Of course, provincial minimum wage affects all workers except those in the federally regulated sector. In the past, have they tended to follow the federal minimum wage in going higher?
Second, in the business sector itself, outside what the actual minimum wage might be, has there been pressure on businesses in the past to increase their wages in response to an increase in the federal minimum wage? Perhaps it hasn’t had an impact because we’re really talking about a fairly small number of employees who are actually affected. I’m asking whether, in the past, it has affected the larger workings of the labour force and the wage structure.
I’ll leave that at that. I hope those are clear questions. They’re other takes on the questions that some of my colleagues have asked.
Mr. Charter: I’m happy to answer your questions.
When it comes to the previous federal minimum wage rates, prior to 1996, there was a free-standing federal minimum wage, but it had gotten so out of step and quite behind provincial rates, and I understand that was the reason behind pegging the federal minimum wage to provincial and territorial wages in 1996, so I’m not sure, based on that, that the trend would be the federal minimum wage driving the provincial rates.
As far as your question about the impact on businesses, I’m hearing it in terms of whether there might be spillover effects or the possibility of employers increasing the wages of those who earn close to or just above $15 an hour. To that, I would say it is possible there may be spillover effects from setting this new federal minimum wage rate at $15 per hour for those who currently earn at or just above $15 per hour; they may see some wage increases. Employers might do this to retain employees or maybe even to attract new employees. But the size of the spillover effect is fairly uncertain and difficult to estimate. It is unlikely to impact people who are making, say, a couple dollars over $15.
Senator Dasko: Thank you.
Senator Moodie: Thank you, Mr. Charter and your team, for coming today and for your wonderful, very data-driven answers.
I want to ask for a slightly different take on data. I am wondering if you can shed some light on a demographic difference you might have come across in the makeup between full-time employees and part-time employees or temporary federally regulated employees. Do you have that kind of breakdown? I’m trying to get at that other group that might be smaller groups of individuals, perhaps socio-economically challenged individuals. I’m trying to understand the difference between full-time and part-time employment and the impact of the minimum wage on these groups, differentially.
Mr. Charter: Thank you very much for your question.
I’m afraid I don’t have data on hand about the impact with respect to full-time or part-time employees. I might ask my colleague Sébastien St-Arnaud whether he has something, but I suspect he probably doesn’t. Sébastien, can you confirm if we have that?
Sébastien St-Arnaud, Manager, Labour Program, Employment and Social Development Canada: No, unfortunately, we don’t have part-time versus full-time data.
Mr. Charter: My apologies, senator.
Senator Moodie: No problem.
I will ask another question related to the figure of $15. The Expert Panel on Modern Federal Labour Standards 2019 report made a recommendation — or proposed — that the federal minimum wage should be linked to 60% of the provincial median of wages or to 60% of all Canadians’ median wages. When you look at the number of $15 for a proposed minimum wage, it falls short of what that median might be. Why was this number chosen?
Mr. Charter: Certainly. I’m happy to answer that question.
I guess first I’d say, as you mentioned, the expert panel recommended setting the new minimum wage rate as a percentage, 60% of either federal, provincial or territorial minimum wage. Of course, we set the minimum wage at $15 per hour and indexed that to the Consumer Price Index. In their final report, using 2018 data at the time, the panel calculated that 60% of the median wage at that time with that data did equal $15, but as you pointed out, using newer data, it may not equal $15 at this point. I don’t have figures on hand specifically for what the calculation of the current median wage is.
In a previous answer, I pointed to a number of reasons for setting the rate at $15, including the minister’s mandate commitment and also what we heard during consultations about a federal minimum wage or even specifically about a $15 minimum wage, including stakeholder campaigns. There is also the recommendation of this panel, who recommended a free-standing federal minimum wage — not your panel but the Expert Panel on Modern Federal Labour Standards, who recommended a free-standing federal minimum wage indexed to inflation.
Maybe I could also add that we set the rate at $15 for the reasons I described and are also indexing it to the Consumer Price Index. I might also add that there is a trend across provinces right now to automatically adjust minimum wages based on indexing formula. Provinces like Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Saskatchewan and Yukon all index their minimum wages to the Consumer Price Index so that they rise with inflation and the cost of living. So this approach we’re taking would align with that.
Although our rate is set at $15 per hour, there are also provisions where, if there is a provincial or a territorial rate that’s higher, like, for example, in Nunavut at $16, which is likely to take into account the cost of living, under these changes, that rate would prevail and those employees would get that minimum wage rate in that jurisdiction.
The Chair: Thank you.
[Translation]
I’d like to make sure that Mr. Charter is getting the translation.
[English]
Mr. Charter, if you don’t get translation, please let us know.
[Translation]
Senator Mégie: Mr. Charter, thank you for coming to speak with us today. In the course of their work, the expert panel recommended raising minimum wage to $15 an hour. Do you know if they studied the system used by other countries, which have a system similar to Canada’s? Do you know what the impacts of that increase are?
[English]
Mr. Charter: Thanks very much.
I guess I’ll say that the expert panel took a pretty brood look at the question of minimum wages. It was, of course, an independent panel. I do believe they looked at international examples such as, for instance, the United Kingdom, if I’m not mistaken, and how they approach the minimum wage, as one example. I wasn’t personally involved in the deliberations of the independent expert panel.
Having mentioned that they examined international approaches, including the United Kingdom, I might turn to my colleague Sébastien St-Arnaud to see if he has on hand more information on international comparables that the panel looked at.
Mr. St-Arnaud: Unfortunately, I have a blank in my memory. I’ll have to look into it. My apologies for that.
The Chair: Could we ask that we get that information when you find it? You can relay it to our clerk.
Mr. Charter: Certainly. No problem. Just to be clear, what you are looking for is international comparisons examined by the expert panel with respect to minimum wage, correct?
[Translation]
Senator Mégie: That’s correct.
Mr. Charter: Perfect, thank you.
Senator Mégie: What impact did the increase have on companies and on the employees themselves at the time of the raise?
If you have them in writing, that would be helpful for us to get them. Thank you very much.
[English]
Senator Omidvar: Thank you, Mr. Charter and Mr. St-Arnaud, for being with us today. I have found your explanations to be most useful. The benefit of going last, or almost last, is most of the questions have been asked and very well answered, but I will dig a little deeper on the question of data.
Mr. Charter, you disclosed the data on the employees by region, age and gender, and some other particularities as well. Do you collect data by race? Of these 26,200 employees, I would like to know how many are racial minorities, how many are Black and whether you have figures on Indigenous participation, because we are all concerned, as you must also be concerned, about racial inequity in our society.
Mr. Charter: Certainly. Thanks for your question. Those are definitely important data points to monitor.
For our analysis of employees who are impacted by this change to put in place a $15 federal minimum wage, we used Labour Force Survey micro data to prepare our estimates. The only data I have available, I’ve shared, and it is related to immigration status. Of the 26,200 employees impacted, 9,500 are immigrants. I don’t have specific data on the demographic points that you just requested, all of those specific ones, but at the moment only on recent immigrants.
Senator Omidvar: So you don’t have the data or you don’t collect it?
Mr. Charter: I do not.
Senator Omidvar: You don’t collect it?
Mr. Charter: The data we use is the Labour Force Survey, which is collected by Statistics Canada. In developing our estimates for employees making under $15 per hour specifically in the federally regulated sectors, all that we could drill down to using that Statistics Canada data was the recent immigrants at 9,500.
Senator Omidvar: Okay. That may give us an idea, but it is not precise, obviously.
I have a question around the deliberations of the expert panel on setting the federal minimum wage and whether that expert panel took into account the proposals around the living wage, which if we take the living wage proponents into account, the minimum wage should be more like $21 an hour. I wonder if those proposals or discussions were taken into account.
Mr. Charter: First, I will say my colleague Sébastien St-Arnaud signalled to me that he could add something about your question around demographics. Maybe I will turn it over to him quickly to add what he can, and then I will speak to your question about the living wage.
Mr. St-Arnaud: Senator, thank you for your question.
Although we don’t have data, we did conduct a lot of research looking at what the literature says about people in low-wage jobs. We found that this measure, the $15, will likely benefit all workers, of course, in low-wage jobs. Looking at what the research shows, it shows, for instance, that Indigenous people, members of visible minority communities and people with a low level of education are more at risk of being in this kind of job. Therefore, we think this measure will support those employees. I wanted to add that.
Senator Omidvar: Thank you. I appreciate that, but I think you will see senators pushing for more precise data in these matters. Thank you.
The Chair: Mr. Charter, did you want to continue with the second question that Senator Omidvar had?
Mr. Charter: Certainly.
As I mentioned, I wasn’t part of the deliberations of the independent expert panel, but I do recollect in their final report that they did look at the question of poverty and wage rate in terms of setting the federal minimum wage in and around $15 per hour.
More broadly on the question of living wage, there is a really interesting conversation and a lot of fascinating research on the question of living wage right now, but I also understand there is maybe not a consensus on what specifically might constitute a living wage. What I might say about these changes we’re making to Part III of the Canada Labour Code to put in place a federal minimum wage is that, as I mentioned, the Canada Labour Code Part III sets out really basic labour standard protections for employees, and only in the federal jurisdiction. These are things like rules around hours of work, vacations, various leaves and, of course, setting the minimum wage or the wage floor just in the federally regulated private sector. So it is a little bit different than a living wage and all the questions that surround a living wage.
Senator Omidvar: Thank you. I believe that the new federal minimum wage is a step in the right direction. Even though it impacts such a small percentage of workers, I’m hoping that a rising tide will lift other boats. Thank you.
The Chair: I don’t see any of my colleagues having other questions for our witnesses for this first panel. Thank you to both witnesses for being here. As you can see, we have a lot of questions on data and the specifics of data collection. I think this committee is very concerned in terms of making sure that we identify exactly who those measures will benefit. If you have, from your side, anything that you can relate to us, we will, of course, be welcoming it all the time, so feel free to send it our way.
Our next panel will also deal with Division 23.
[Translation]
Today, we welcome from Unifor, Jerry Dias, national president, and Navjeet Sidhu, national representative. We also welcome, from the Canadian Federation of Independent Business, Jasmin Guénette, vice-president of National Affairs. He is accompanied by Emilie Hayes, policy analyst of National Affairs.
[English]
Jerry Dias, National President, Unifor: Thank you very much for the opportunity this morning. My name is Jerry Dias, I am the national president of Unifor, and I am joined today by Navjeet Sidhu from our national research department. I would first like to thank the members of the committee for your time and for allowing us the opportunity to speak with you today regarding Bill C-30.
On behalf of our 315,000 Unifor members across the country, including the more than 65,000 members working in federally regulated sectors, we would like to congratulate the government on introducing long overdue legislation on establishing a $15 federal minimum wage. With no federal minimum wage in place since the late 1990s, this policy will make a significant impact on the lives of the nearly 67,000 federally regulated private sector workers currently earning less than $15 per hour.
For several years now, Unifor, along with other labour and community partners across the country, have been actively engaged in the fight to raise provincial and federal minimum wage rates. Our key argument is the simple fact that no worker, regardless of employment status, should be living in poverty. Unfortunately, this continues to be the reality for many low-wage workers across the country who are struggling to make ends meet.
This is not only an issue of fairness but of economic justice and equity as well. The pandemic has shown how many frontline, essential low-wage workers, many of whom are women, racialized or newcomers, put their lives at risk every day to ensure that the Canadian economy continues functioning and that goods and services keep flowing. Yet we have witnessed many corporations that have seen their profits soar during this pandemic not pass along these financial gains on to their workers. Even the extra $2-an-hour pandemic pay that many retailers and supermarket chains have provided their workforce was taken away. This is disgusting, just to be clear. Galen Weston, who owns Loblaws, $8 billion, should wake up in the morning, look in the mirror and be ashamed of himself. The same with Metro and Sobeys. Taking away the pandemic pay after three months and saying, we’re okay now — that was in June of 2020. Once again, they should be ashamed of themselves. Instead, company shareholders and executives have reaped the benefits. It is clear we cannot rely on corporations to do the right thing. No question about that.
Government intervention is needed to create a fair wage floor for all workers. That is why we strongly believe that the federal government can demonstrate bold leadership by setting the minimum wage rate higher than the slated $15. The reality is that over five years have passed since we first began advocating for $15. Today, this figure is no longer adequate at improving the quality of life for low-wage workers and their families. A handful of Canadian jurisdictions have already reached or surpassed this benchmark, including British Columbia, Alberta, Nunavut and the Northwest Territories. What we need is a higher federal minimum wage rate that sets a positive example for all other provinces to follow.
Last year, Unifor launched its Build Back Better campaign and put forth a series of policy recommendations that ensures our national economic recovery strategy is built upon principles of fairness, inclusion and resiliency. Among our recommendations was the establishment of a federal minimum wage that was equal to 60% of the median hourly wage for full-time workers in Canada. Today, that figure would be $16.73 an hour. Our recommendation also supports annual wage increases that are indexed to the rate of inflation, as proposed in Bill C-30, or the average annual wage increase, whichever is higher.
Finally, we would like to encourage the government to take this opportunity to examine establishing a federal low wage commission, a recommendation that was also brought forward by the expert panel on modern federal labour standards in Unifor. This independent commission would be comprised of key stakeholders, including government, the community sector, labour unions and employers, and would be tasked with researching minimum wage policy in Canada and its impacts on workers, business and the economy.
A model that is frequently highlighted is the Low Pay Commission in the U.K. This independent commission has been successful at reducing the highly political and ideological nature of minimum wage policy. Instead, it is focused on a collaborative model that emphasizes up-to-date research, data and evidence-based policy-making. It also makes informed recommendations on measures that factor in current economic and social conditions. We have submitted a brief backgrounder on the Low Wage Commission, along with our written remarks, for your review.
We believe that these two measures combined would put Canada on the right track toward ensuring a stronger economic recovery, enhancing job quality and improving the quality of life for low-wage workers across the country.
I thank you very much and look forward to your questions.
[Translation]
Jasmin Guénette, Vice-President, National Affairs, Canadian Federation of Independent Business: Good morning. My name is Jasmin Guénette, and I am the vice-president of National Affairs at the Canadian Federation of Independent Business, or CFIB, which has 95,000 members across Canada and in all sectors of the economy. I am accompanied by my colleague Emilie Hayes, senior policy analyst.
I want to thank the chair and the members of the committee for this invitation. We are very pleased to make this presentation today. I will make my opening remarks in French and English.
While the majority of our members fall under provincial jurisdiction, over 1,700 of our members fall under federal jurisdiction, primarily in the transportation, telecommunications, and grain elevator sectors.
[English]
I would like to take a moment to share some data on the state of small business. Only 56% of small businesses are fully open at the moment, and only 29% are making normal sales. In our recent research, we estimate that one in six businesses are at risk of closing because of COVID-19, which represents 2.4 million jobs. In addition, debt burden puts small businesses in a difficult situation. 73% of businesses took on debt because of COVID-19, and the average debt per business is $170,000. As you can tell, the situation is far from normal at the moment, and it’s actually quite difficult for a large number of small businesses across the country.
When we asked our members in federally regulated sectors if their business would be negatively impacted by a $15 per hour minimum wage, almost a quarter of small businesses said they would be negatively impacted by such a policy, 30% said that there would not be any impact and 44% said they don’t have any employees that are paid at the minimum wage. As such, the majority of our members in the federally regulated sectors are already paying their employees more than minimum wage.
If the government’s goal is to help lower income earners, we believe that increasing the basic exemptions for these workers is a better policy, as it ensures that more money stays in their pocket. Further to this, this type of policy would not increase hiring costs of small businesses already severely impacted by the pandemic.
As small businesses continue to struggle to stay afloat, it is essential that the government does not add to their burden, which could severely hamper their eventual recovery. They are already coping with the recent CPP and QPP increases, as well as an increased carbon tax in the four provinces under the federal backstop. Therefore, increasing minimum wage would be more than many businesses could bear at this time. This is in addition to other changes to the Canada Labour Code that the government is planning on introducing that have the potential to increase costs and red tape even further for small businesses.
We are not out of the pandemic yet. Now is not the time to increase costs on businesses. Government should first focus on reopening the economy and making sure businesses can survive the pandemic. Even if the government legislates a $15 minimum wage, it will do little to help workers if they do not have a job to return to.
A mandatory $15-per-hour minimum wage policy could also have unintended consequences for businesses. Employees already paid at or above $15 an hour could want a raise because all entry-level positions would now be at $15 an hour. This could create salary inflation in the business. It could also have unintended consequences for workers, especially for unskilled workers and youth, as it would be more costly to hire them, and they would lose out to more experienced workers. It could also reduce working hours for existing employees and could reduce the number of employees in the business.
[Translation]
That concludes my presentation. I once again thank the chair and the members of the committee for giving us this opportunity to make this presentation before you today. We look forward to your questions.
The Chair: Thank you to our two witnesses for their opening remarks. We will proceed with questions. The first questioners will be the deputy chairs of the committee, beginning with Senator Bovey.
[English]
Senator Bovey: I want to thank our witnesses. Mr. Dias, it’s good to see you again. We meet in various contexts.
I have two questions I would like to put forward, and they both revolve around consultation and past realities. A side bar to that is that I’m really intrigued as to who follows whom on minimum wage; does the federal government follow the provinces, or do the provinces follow the federal government?
Mr. Dias, I was really interested in your suggestion of a low-wage commission, following that in the U.K. Do you see such a commission as being an important aspect of ongoing consultations?
My other question is to both of you. As one who has headed up institutions before and had to deal with the changes in budgets when minimum wages have been increased, I can honestly tell you there was a fear beforehand — where is the money coming from — but I’ve never found it to be a negative. In fact, I’ve always found it to be an inspiration for staff. I also never had to cut staff as a result of increased minimum wage. Maybe you have more experiences of prior minimum wage increases, as I just have it in one sector in my own personal experience.
Those are my two questions.
Mr. Dias: Thank you.
First of all, the low-wage commission is impartial; it’s not beholden to any political party, so it truly is impartial. That is number one. That’s so important because it gets rid of all of the nonsense, to be candid with you. If today’s panel were talking about a federal minimum wage at $13 an hour, the argument from the small business community would be, “That it’s too high; it should be moved to 12.” So it doesn’t matter what we are talking about as it relates to federal minimum wage. I’ve never seen any of the business federations ever say, “Hey, this is a good idea.” There’s always the notion of Armageddon. “If we raise minimum wage, thousands and thousands of jobs will be lost.” We always hear it. It’s such nonsense because the numbers show the opposite.
I think if we were to have a panel or a commission based on straight fairness and they were to come out with recommendations, that would eliminate a lot of the myths and the BS that comes out of these types of debates. You’re going to find that these expert panels in different countries have come out with fair recommendations. The government still has the right to say “yes” or “no,” but ultimately, at least they would have independent, fact-based advice.
The other piece of the argument is around — I think you were talking about — the impact and how it could even cause the loss of jobs. I believe that was a part of the argument. I think that was your second piece to the question.
Senator Bovey: Yes.
Mr. Dias: Look, the numbers don’t prove that at all. Your example, what happened with you, seems to be how things are playing out across the country.
I deal with this frequently. I’m usually in airports where I have $15-per-hour workers or $16-an-hour workers. Their contract gets flipped, whether they’re working in a parking garage or as baggage handlers. The contract ends up getting awarded to another company. The other company hires them and pays them a dollar an hour less. Two years later, they flip the contract and get the same people recycled. It’s a cycle of poverty. We need to fix this.
[Translation]
Mr. Guénette: Thank you, Madam Chair. I’m accompanied by my colleague Emilie Hayes, who will also answer some questions. I’m not as theatrical as Mr. Dias. I’ll answer with some facts.
Currently, only 29% of Canadian SMEs are generating regular income for this time of year. Adding burdens to their shoulders could be devastating for many, many SMEs. As I mentioned in my presentation, they are having a very difficult time generating income and paying their rent. Many of them need the Canada emergency rent subsidy to pay the rent. SMEs are having great difficulty paying salaries, and many of them use the Canada emergency wage subsidy to pay salaries. They have also gone through various lockdowns and economic restrictions.
In Ontario, many of the restrictive measures are still in place, as are Manitoba, Alberta and Nova Scotia. Several provinces have further restricted the activities of SMEs, further limiting their ability to generate revenue.
If we were to increase the minimum wage for businesses under federal jurisdiction, when they are already struggling financially, it would certainly be a blow to many, many businesses.
First and foremost, the government should ensure that as many SMEs as possible make it through the crisis, and then discuss new public policies, once the economy is truly reopened and our SMEs have fully recovered. Now isn’t the time to implement such a public policy.
If I may, Madam Chair, I’ll turn things over to my colleague.
[English]
Emilie Hayes, Policy Analyst, National Affairs, Canadian Federation of Independent Business: Yes, I will add to what Jasmin was saying.
It’s so important to keep in mind the context we are currently in. We are currently in a pandemic. As Jasmin mentioned, it’s not a normal circumstance for small businesses.
In terms of a commission to study this, I think our members would welcome it because at the end of the day, to be properly informed, especially in terms of consultations, having a cost-benefit analysis is necessary. We’ve seen in certain circumstances in Seattle where jobs may not have been lost, but we’ve seen a reduction in the youth employment rate. As we know, at the end of the pandemic, many young people who have not had opportunities to enter into the workforce and gain necessary job experience are going to lose out. We worry that increasing minimum wage at this time in the context of the pandemic would create a lot more difficulties and barriers for youth especially to enter the workforce. I think this is something very important for all senators to keep in mind as they’re studying this legislation, which is the overarching context that we are currently in. It is not a normal circumstance.
The Chair: Senator Bovey, I’m not sure if you want to continue on that. I see that Mr. Sidhu also wants to add something. Are you okay with that?
Senator Bovey: Yes. I do have one quick question before we turn over.
The Chair: I have Mr. Sidhu with his hand raised. I want to make sure he gets a chance to speak.
Navjeet Sidhu, National Representative, Unifor: I would like to give my time to Jerry, please.
The Chair: Okay.
Mr. Dias: Thank you.
Look, worrying about youth getting employed as the rationale for holding this back is disingenuous, frankly, because to say that priority is denying these opportunities, I don’t buy that even for a minute. I don’t think anybody on the panel buys that somehow a conscience has been developed. The reality is the pandemic has caused stress on everybody, no question about it. But at no time, regardless of if they’re tripping over $100 bills, will this group ever say they support increasing the federal minimum wage. It’s kind of like a sign that says, “Free beer tomorrow.”
The Chair: Yes. Thank you.
Mr. Dias: Because we know there’s no such thing as free beer. Ultimately, I don’t buy the argument.
The Chair: Mr. Dias, thank you. I think we get your point. I just want to make sure that the senators get a chance to ask their questions. We only have one hour with you all.
Senator Bovey: I just want to make the point that when we talk about context, I think you’re absolutely right, and I think here we’re looking at several different contexts. Yes, there’s a pandemic context, but there’s also the context of employees and minimum wage. If I’m right, this provision would come in six months after proclamation of the bill. I’m an ever-living optimist hoping that maybe by then the context of the pandemic will be history. With that, I look forward to my colleagues’ questions.
The Chair: Thank you. We do have a lot of senators wanting to ask questions, so I’m going to ask senators but also the witnesses to try and be very concise with their answers.
Senator Frum: My question is for Mr. Guénette and Ms. Hayes. The briefing notes that this committee received tell us that this legislation is expected to increase employers’ costs by $44.1 million in the first year if firms do not reduce employee hours and make other labour force adjustments. That, of course, is always the concern when you set a minimum wage that isn’t at the right level, and with a federal minimum wage, you are legislating across jurisdictions where there are different costs of living. I know we all believe in fair working wages for all Canadians, but we don’t want unintended consequences of worker layoffs, as you already alluded to in your opening comments, Mr. Guénette.
Do you have any analysis on how many businesses are expected to be forced to take measures such as reducing employee hours or layoffs or closing their businesses altogether because of an inability to absorb these increased costs, especially after a pandemic? I know you have already addressed some of that, so I will maybe ask you to focus how you answer this question on if there are regional differences. Are different regions affected differently? Thank you.
[Translation]
Mr. Guénette: Thank you, Senator. I’ll let my colleague, Ms. Hayes, answer your question.
[English]
Ms. Hayes: Thank you very much for your question, senator.
We haven’t done any research on minimum wage in particular in the context of the pandemic, but in terms of research we’ve done provincially, our members vastly say that they’d have to first reduce working hours, the number of employees and take other measures certainly. But I think in the context of the pandemic, this would be made even worse.
Just to address one of the points that one of your colleagues made, yes, the legislation will come into place six months from now, but six months from now, businesses will likely still not be at normal sales volumes. As my colleague Mr. Guénette mentioned, they are currently heavily indebted, and it will take, for instance, some sectors years before they fully recover.
I think regional differences do play into this as well because, as you mentioned, the cost of living is not the same in all provinces. We’ve seen some of these issues when minimum wage was increased in Ontario, for example. In northern Ontario, for example, the cost of living is much lower than in southern Ontario, so businesses that were currently paying minimum wage up in northern Ontario found that it was much more difficult to bear.
At the end of the day, we do want to mention that employers strongly believe — especially small businesses — in fair wages, because they are competing. Especially before the pandemic, there were significant issues with hiring. There were significant job vacancies in small businesses. In order to be able to hire, they do have to make sure they are paying competitive wages in order to attract employees.
At the end of the day, we do not believe that this is the right time to increase minimum wage.
[Translation]
Mr. Guénette: Again, thank you for your question, Senator.
I would add that, when we talk to our members, we learn that one of the impacts of raising the minimum wage to $15 is that they will have to raise the price of their products and services; that could be a consequence of the minimum wage increase.
As my colleague mentioned, this will reduce the number of hours for younger or less experienced worker. Another impact would be the reduction in hours for some employees, as mentioned earlier, and also the reduction in the number of employees the company could hire.
This is why it is proposed that the government increase the basic exemption. If the goal is to put more money in the pockets of lower-income workers, the basic exemption is a more appropriate public policy. First, workers would have more money in their pockets, and there would be no additional costs to businesses.
The Chair: Thank you, Mr. Guénette.
[English]
Senator R. Black: My first question is to Mr. Dias. According to Budget 2021, the COVID-19 pandemic has also increased the focus on essential work done by a large proportion of minimum-wage-earning workers. Can you highlight some of the impacts felt by minimum wage workers across Canada during this challenging time? Do you believe this increase will help lower those impacts? I do know you’ve said it should be higher, but will this help?
Mr. Dias: It’s certainly not going to hurt. I mean, I represent 25,000 members in the health care sector, including PSWs that have worked in long-term care facilities that work two or three jobs. We know, of course, that these PSWs have been transferring the pandemic from one long-term care facility to another. Certainly a living wage and some regulations that won’t force people to work two or three jobs make sense in what was a thriving economy.
I represent grocery store workers. Over 1,000 grocery store workers a month are quitting and looking for other employment because at minimum wage, at $14 an hour, it is not worth their while to put their lives at risk and the lives of their families.
I can walk through all of this, but the bottom line and the argument that I’m trying to make is that all of the compelling arguments about now is not the time, look how Chartwell nursing homes just gave their CEO the biggest bonus he has ever had because he navigated well. Like heck he did. Galen Weston, the Loblaws chain, making more money today than they ever have. They cancelled the pandemic pay. They aren’t going to do a damn thing besides pay minimum wage.
So the bottom line is you can’t leave it to the corporate community to do it themselves because they won’t. The thinnest book in the world is the book of corporate ethics, so the government has to do this. We will hear arguments all day, “Oh poor young people. Oh poor this, poor that. Can’t raise the rate. We will lose all kinds of jobs.” It’s always Armageddon. The bottom line is there has never been a time when any of the business councils said this is a good time to raise the minimum wage ever. Look at history. Not one presentation from a business council said it was a good time. We have to take that into account. Will it increase? Yes. It will help significantly.
Senator R. Black: Thank you.
I have one question for Mr. Guénette. I know you said a wage increase isn’t appropriate at this time, but Division 23 establishes the $15 minimum wage raise will be adjusted annually on the basis of the Consumer Price Index. Do you consider the use of this adjustment reasonable or not, and why? Thank you.
[Translation]
Mr. Guénette: Thank you for your question, Senator Black. I want to reiterate that the government’s proposal is to regulate companies under federal jurisdiction, so I think we need to comment on companies under federal jurisdiction, because that’s what we’re talking about today.
To answer your question specifically, Senator Black, first of all, before talking about a wage adjustment process, we are asking that a cost-benefit study be done, first to better understand the impact of a minimum wage of $15 an hour for businesses under federal jurisdiction. Only after this analysis is completed can subsequent adjustment mechanisms be attempted.
For the time being, we are asking that a study be done to understand the effect of a $15 an hour minimum wage for businesses under federal jurisdiction. Thank you.
Madam Chair, may I turn the floor over to my colleague, if she wishes to add anything?
[English]
The Chair: Senator Black, did you want to follow up on that?
Senator R. Black: No, I am fine. I will hear from Ms. Hayes.
Ms. Hayes: I wanted to emphasize that our members are not Loblaws or Chartwells. Our members are really small, family-owned businesses. Just to give some context, CFIB. The majority of our members are under 20 employees, so we really do represent the smallest of the small even when they are federally regulated. The vast majority are provincially regulated. We have around 1,700 that are federally regulated. Again, these are really the smallest of the small. They don’t have huge CEOs and bonuses and large corporate shareholders that they are accountable to. At the end of the day, they really are the mom-and-pop shops that you think of.
Senator R. Black: Thank you.
The Chair: Thank you. I think Senator Black really wanted to know your position on the specific of the indexation to inflation.
Senator R. Black: Is that appropriate?
Ms. Hayes: I think Mr. Guénette answered saying that we are not sure without a cost-benefit analysis. We really would rather have the government look at that first before exploring those options.
Senator R. Black: Thank you for your answers.
Senator Dasko: Thank you to our witnesses for being here for a very enlightening debate.
Mr. Dias, I know I’ve said this to you before, but I want to thank you again for your role in bringing GM back to Oshawa. That is a very good outcome for Oshawa and for Ontario, and you played a very key role in it. I said it before and I will say it again to you every time I see you. That was quite a good thing.
We are here to talk about the increase in the minimum wage. I want to focus on the distinction between those who are going to get it and the impact it might have elsewhere, on other businesses, workers and so on. Mr. Dias, the witnesses who came here from the government said that 26,000 people will benefit. You said 67,000, so there is just a little bit of difference there. Maybe I will just throw that on the table. It could be a difference in definition or whatever. I don’t know if you want to speak to that now, but I really have a main question which is different.
Mr. Dias: So this is when I turn it over to Nav, who is my research guy with all my other information.
Mr. Sidhu: To clarify, the 67,000 are those federal workers earning less than $15 right now, and the first number you mentioned is those currently earning minimum wage.
Senator Dasko: Okay. I think I’ve got that. Thank you.
I want to get back to the whole issue of the impact of this. I asked this question in the earlier panel. First of all, when it comes to small businesses, I have to say it has been heartbreaking during this pandemic, walking around the streets of Toronto, seeing all these small businesses, restaurants and small retail closed. It is really heartbreaking to see that. I am heartened by the new economic growth figures that show us the economy is coming back. I am hopeful we will get there. Just like Senator Bovey, I am optimistic that perhaps by the time this kicks in, we will be back to normal times. So I am referring in my question to what are normal situations as opposed to pandemic situations.
When it comes to minimum wage, from the past research that we have that exists, what actually is the impact of the minimum wage on other sectors? We learned that provincial minimum wages have not really been affected by the federal, because the federal has for many years lagged behind the provincial in terms of the federal minimum wage. But in terms of the impact in the small business sector, is there an impact on the wages of other workers outside of the companies who employ workers who will be seeing increased minimum wage? Is there pressure?
I had an answer from the government witnesses before. I would like either Mr. Dias or Mr. Guénette to try to answer that. I know that your surveys show that your members say there is some impact, but it is not clear what the impact is on actual wages. I will open that up to anybody who would like to answer it. Thank you.
[Translation]
Mr. Guénette: Thank you very much for that question, Senator Dasko.
I will also ask my colleague Emilie Hayes if she would like to add anything to my answer, if possible.
First of all, Senator Dasko, you’re right.
[English]
It’s heartbreaking to walk in many parts of our downtowns and see all those small businesses closed.
[Translation]
I really appreciate your comment. One of the most devastating aspects of the pandemic is the impact it has had on our small businesses, our neighbourhood restaurants, our local retail. Small family businesses are having a hard time weathering the storm. That is why we are updating you this morning, to tell you that now is not the time to add tax burdens on the shoulders of businesses that are having a hard time weathering the storm financially.
We can imagine what the situation will be in six months, we can imagine what the situation will be in a year, but we do not know what the situation will really be. Therefore, before implementing a policy such as this one, which could have major negative impacts on Canadian small businesses, the government should undertake a study of the costs and benefits of these measures. Such a study could answer some of the questions we are asking this morning about the impact this could have on the minimum wage in the provinces or on the minimum wage in other sectors that are not under federal jurisdiction.
Again, the impact on businesses and SMEs is a potential reduction in the number of hours worked and the number of employees, and a decrease in the hiring of young and less skilled people in companies.
In addition, if the federal government goes ahead and increases minimum wage for workers under federal jurisdiction, it could have a ripple effect on SMEs under provincial jurisdiction, and they face the same challenges.
So we have to be careful. At this point, many SMEs, the ones we love and that are in our neighbourhoods, are experiencing a lot of difficulties, and such a policy could further jeopardize those that may succeed in getting through the current crisis.
[English]
Mr. Dias: The argument will never change. It’s whether or not the increases should be changed with inflation. There’s not going to be an answer. There will never be a time that you are told that this is a good time. The bottom line is government has to do this. The group that this helps the best are airport workers, no question. But also the key thing is the federal government has taken a leadership role to send a message to the provincial governments that they need to do much better. I think that is as big of a part of this discussion as it is the actual impact on federally regulated employees.
The Chair: Thank you.
Senator Dasko, did that answer your question?
Senator Dasko: I was trying to hone in on past research and what research has shown in the past about the impact of federal minimum wage increases on those in the private sector. As opposed to what might happen, what has been the impact in the past? I don’t know if you want to add to your answer on that or not?
The Chair: I want to make sure we have time for all the questions, but maybe our witnesses can keep it in mind that we are trying to get — pardon me, Senator Dasko, if I am wrong, but you are also wanting to see if this measure has some sort of a side effect in other sectors, right?
Senator Dasko: Yes. Impact on other sectors, yes. In terms of minimum wage having an impact, putting pressures on other sectors, and what the research from the past may have shown on this.
The Chair: Maybe we will try to get that answer later on.
Senator Dasko: Yes, thank you.
The Chair: I want to make sure the senators get their questions in.
Senator Kutcher: Before I ask my question, I just want to underscore the importance of Senator Dasko’s question: What is the spillover effect, how has that been demonstrated in the past and what modelling has been done to determine it for this particular issue?
My question is for Canadian Federation of Independent Business. We are all very concerned about the health of our SMEs. Thank you for sending the presentation beforehand. I looked through it very carefully, and slide 3 I found particularly interesting. I did follow the link to the thesaurus for the data, and my question still holds.
In that slide, you say one in six businesses are at risk of closing. I assume that’s not just focusing on federally regulated companies but all SMEs. I know it was around the pandemic. Now, “risk” is a highly emotional word but, in sober discussion, we need to sort of mitigate emotions. There actually is a mathematical model that we use for risk determination, and it’s I times P. I is impact and P is probability. The impact you have been very clear about — it’s closing. So that’s a substantive impact. However, I can’t find anywhere in the research what your probability metric was.
This is complex so I will go more slowly. What was the probability metric that you used to multiply times the impact to determine risk? And second, what will be the proportionally greater impact that a $15-an-hour minimum wage added to your existing probability calculation to the construct of risk? So that’s my question.
Ms. Hayes: Thank you so much for your question, Senator Kutcher.
For the first question you asked, we would have to check with our research team. Jasmin and I are neither economists nor mathematicians, and we have a team within CFIB that is in charge of doing research. We would be happy to, potentially through the chair or through the clerk, get you the answer to your question.
For your second question, we would have to survey our members again, based on the context of the $15 minimum wage in addition to the question we asked back in I believe it was the fall on the risk of closing. This would require a little bit more research on our part to be able to really get you a clear and coherent answer on that.
But for your first question, let us check with our research team and get back to you on that, if you would like.
Senator Kutcher: Thank you very much. It would be really important to understand what you actually mean with that data. That would be very much appreciated.
Has that risk metric been proportionally analyzed over time for this COVID pandemic? Because, for example, I am a senator from Nova Scotia, and we have had substantively much less impact of COVID until just recently in Nova Scotia. I am interested in what are the time frames of that metric analysis, as opposed to Toronto, for example.
Ms. Hayes: Absolutely. I know they can divide that data out by region. I think it is possible that we did ask that question at two different periods of time. Definitely let me check it with our research team and try to get you a really clear answer that has that data that you are looking for. If possible, would you mind emailing us that question, either through the clerk or the chair? I just want to make sure that we are giving you the answer that you are looking for and that I’m not misinterpreting or not giving the research team proper parameters.
Senator Kutcher: It would be a pleasure. Thank you so much.
The Chair: Thank you. We will follow up with that.
Senator Moodie: Thank you to the witnesses for coming today.
I know that you bring up a certain perspective and you represent a certain perspective, but I’d like to ask you both to cast your mind more broadly on the impact outside of your own constituencies. This change could also be in anticipation of a greater debate to come. The pandemic has brought focus on workers in precarious positions, such as gig workers and non-unionized employees. When you look at the pandemic, there’s an expectation that the impact will last longer than the actual timing of the pandemic. The recovery will take longer. By proposing this wage increase, does the government go far enough to have the necessary impact to support these particular types of workers? I understand that many of these workers may not fit within your constituencies, but I would like to you think more broadly and give us an impression on this. Thank you.
Mr. Dias: Thank you very much for the question.
You are right. We’ve been talking about a $15 minimum wage for probably eight to ten years. I think about the demonstrations. That’s why we are saying the government should really look to alter the model that talks about 60% of the average of the median wage, which, if you go across the country, will make the new minimum wage $16.73 per hour. That is significant. That will have an incredible impact.
You also raised a broader issue as we’re dealing with gig workers. Frankly, as the system exists today, only 38% of workers even qualify for EI. I give the government credit, because in the last federal budget, the numbers changed significantly. Now, 75% of workers would qualify for EI; 80% if you are a woman.
I think we need to change the structural social policies of the country in order to compensate. Overall, I think we should seriously talk about a guaranteed living wage and what that means. There are going to be a lot of conversations coming out of this pandemic about who essential workers are, what they are paid and what they should be paid. I welcome your question. Thank you.
[Translation]
Mr. Guénette: Thank you for your question, Senator Moodie. When answering this type of question, our duty is to represent our members well and to put forward our association’s point of view on the issue at hand today. So it is difficult for me to answer your question.
However, I would like to reiterate our message — and today’s meeting is a good example of this: First and foremost, it would be desirable to conduct a very detailed analysis of the government’s proposal before implementing such a policy. An analysis like that would give stakeholders and people interested in this issue the opportunity to learn more about the impacts it could have on small and large businesses, self-employed workers, and workers in sectors where jobs are part-time or piecemeal.
This lack of information could certainly be problematic. If the government were to proceed with its project, there would certainly be negative impacts, mainly for Canadian SMEs.
[English]
Senator Omidvar: Thank you. As per usual, the really important questions have been asked and answered, and I thank our guests for their presence here.
I am struck with the arguments and analysis on both sides, but what I’m looking for is some evidence. This is not the first time that we have raised the federal minimum wage. What evidence do you have, Mr. Dias and Mr. Guénette, that in the wake of increases, there were significant layoffs and that employers took measures like reducing hours or shutdowns? For you, Mr. Guénette, did that actually happen? And please, if we don’t have evidence, let’s put it on the table that we don’t have evidence. For Mr. Dias, what evidence do you have that increasing the federal minimum wage did have an impact on poverty reduction?
[Translation]
Mr. Guénette: Thank you, Senator Omidvar. I’ll give the floor to my colleague Emilie Hayes, who will answer your question.
[English]
Ms. Hayes: Thank you, Senator Omidvar.
In terms of evidence, we have a paper from the University of Washington that we would be happy to share with the clerk. It explored the impact that happened in Seattle when they increased their minimum wage. What they found was that there were not so many layoffs as there were reduced working hours. They found that because of the reduced working hours, people who had their wages increase were actually worse off at the end of the day. Yes, they were getting paid more per hour, but due to the decrease in hours they were actually getting less per month because of the adjustments that the employers needed to make. I would be happy to send those to you.
Senator Omidvar: As far as I know, Seattle had a living wage, not a minimum wage. But that’s an example from the United States. What you are telling me is that you don’t have evidence from the past to support your premise today. Let’s accept that.
Mr. Dias, do you have a perspective on my question to Mr. Guénette, or your own perspective on that?
Mr. Dias: I have a perspective, but for the technical question that you are asking, I will turn it over to Nav.
Mr. Sidhu: In terms of evidence, we use a lot of secondary sources. For example, we can assess the impact of the minimum wage in Alberta since they raised it to $15. There was research done by the Parkland Institute that found that there were not significant employment decreases. There were actually three years of increases in the accommodation and food sector where there was a larger concentration of low-wage workers. Further, to the point of impacts on employment levels, again looking to the research of the Low Pay Commission in the U.K. that has been doing this work since 1997, one of their main findings with increases to the minimum wage was that there was no association between minimum wage hikes and losses of employment hours or employment figures in total for low-wage workers.
Senator Omidvar: That was the answer I was looking for.
Are you familiar with the research done by Professor David Green on the impact of the minimum wage? He concludes that claims that increases to the minimum wage will generate huge costs to the economy and mass unemployment are not credible and the estimated effects on adult employment are minimal. He does admit that employment losses for minimum wage increases for teenagers will exist. I’m looking for some evidence. It’s never completely one-sided; it is a nuanced picture. Do you have any further comments on Professor Green’s research?
Mr. Sidhu: I don’t know his research off-hand. I’d have to look into it. However, I have seen some similar research on the impacts on young workers. Again, though, on the flip side, there’s research that indicates there has been an increase in the hiring of older workers. For a specific provincial Canadian example, in British Columbia in one year alone, in 2011, the minimum wage increased by 28%. There was no significant job loss in association with that 28% increase.
Senator Omidvar: Thank you.
The Chair: Thank you to our witnesses for answering our questions and stating very clearly the different positions. It’s been very helpful to us in our study of this division of the bill.
[Translation]
Dear colleagues, last Wednesday, you’ll recall, we heard from officials who talked to us about Division 28. Today, our last witness of the day will also speak to Division 28, which amends the National Research Council Act to provide the council with the authority to engage in the production of drugs or devices, as those terms are defined in the Food and Drugs Act.
Our witness for the last half hour is Dr. Abraham Fuks, a professor with the Department of Medicine, in the Division of Experimental Medicine, at McGill University. Welcome. I invite you to make your opening remarks.
Dr. Abraham Fuks, Professor, Department of Medicine, Division of Experimental Medicine, McGill University, as an individual: Thank you.
[English]
Good morning to you all. I’m really grateful for the opportunity to meet with you and share several important ideas and concerns.
My name is Abraham Fuks. I am a professor in the Faculty of Medicine at McGill University and had the privilege of serving as dean from 1995 to 2006. Today I am not here to represent the university but bring to you the views of a group of academic colleagues who are committed to Canadian research in the basic sciences and its contribution to the welfare of our fellow citizens. We refer to ourselves rather informally as a coalition of the concerned.
Let me start with very good news. The COVID vaccine represents the world’s exit strategy from the horrific pandemic. These biological materials were produced in a dramatic few months, and their impact is clear. Two significant aspects are less well known.
First, Canadian scientists and entrepreneurs contributed to these successes. For example, Nahum Sonenberg of McGill is a pioneer of mRNA studies and was a consultant to Moderna. Frank Graham, who worked at McMaster University in the 1970s and 1980s, developed the idea of adenoviral vectors used in the J&J and AstraZeneca products. Pieter Cullis of UBC founded the company Acuitas that makes the liposomes that package the Pfizer and Moderna vaccines. In short, decades of support from CIHR in Canada contributed to the life-saving vaccines we have today.
Think for a moment about the return on investment: several millions in research funding over two or three decades to gain savings of billions by shortening the pandemic; eliminating, for example, CERB payments; reversing economic disaster; and halting the human tragedies of the past 18 months.
Second, while the vaccines appeared as if out of nowhere, the foundational science goes back decades. The founder of CureVac was a graduate student in the 1990s when he naively injected mRNA into mice and found the animals could produce proteins and make antibodies. That company, CureVac, was founded in 2008, as was BioNTech. And Moderna, whose CEO is Canadian-trained, was set up in 2011.
Allow me to broaden the canvas for just a moment; 210 new drugs were approved by the USFDA between 2010 and — [Technical difficulties].
To give you a broader perspective for us all, I pointed out that between 2010 and 2016, the USFDA approved 210 new drugs. NIH funding — that is, funding that supported foundational research — was associated with each and every one of those 210 new therapies. Over 90% of this NIH funding was for basic research on the biological targets for drug action rather than the chemical drugs themselves. In other words, NIH funding was complementary to industry research and development rather than a substitute. The basic research was geared to understand the underlying diseases and identified the points of access to which new agents should be developed. Industry, in turn, dedicated its resources to development and applications.
Finally, for those skeptics who worry that dollars for open-ended research are not worthwhile and perhaps wasted, these analysts showed that 20% of the total NIH budget from 2000 to 2016 supported research that contributed to these new drug approvals, a remarkable rate of success for investigator-driven so-called blue-sky research.
We learned from this work that the process from basic to applied research is not a linear trajectory. Academic labs and company research entities are entwined in an interactive, complementary web of activities. It is little wonder that the authors of this analysis state:
This work underscores the breath and significance of public investment in the development of new therapeutics and the risk that reduced research funding would slow the pipeline for treating morbid disease.
We should all be proud that Canadian basic research supported by our federal funding agencies contributed to resolving a public health emergency. Nonetheless, further crises are clearly predictable and inevitable in our fast-paced, globally networked world. However — and here is the locus of our concerns — Canadian investments to support basic research have lagged severely below our own historic standards of excellence and are now a pale shadow of those in other developed countries. When we should be investing more, not fewer, dollars in, to cite one example, the mechanisms of antimicrobial resistance — surely the elephant in the public health arena — both governments and the pharmaceutical industry are falling short of what is urgently needed.
The imperative of support for basic research in Canada was underscored in a recent report to NSERC prepared by the Council of Canadian Academies and a committee chaired by Shirley Tilghman. I quote from her report:
. . . funders should remain cognizant that the investigator-led discovery research proposed today may be crucial to resolving tomorrow’s challenges — a fact powerfully demonstrated by the recent development of novel COVID-19 vaccines building on decades-old science. NSERC and other NSE funders should consequently be wary of allowing the share of priority-driven funding to increase at the expense of fundamental, investigator-led research.
But we cannot recreate such Canadian successes when the CIHR budget received virtually no year-over-year funding increase this year to the open investigator programs. Our research ecosystem is unstable and under threat. This serious problem is compounded by the increase of 23% to the American NIH budget, equalling a $9-billion increase year over year. As a result, the NIH budget will soon be more than 50-fold that of CIHR. Such starvation will threaten our ability to retain and recruit the finest talent and will certainly not provide an attractive aspect to pharmaceutical institutes and investments. After all, pharma wants partners who offer colleagues, collaborators and trained talented students who become the highly qualified personnel for its own laboratories.
If we fail to change course and fail to invest aggressively, Canada will have no intellectual dowry to offer either to the next generation of scientists and clinicians nor to the needed partners from the pharmaceutical industry. This reality explains our simple title: The coalition of the concerned.
I thank you for your time and this special opportunity, and I look forward to our discussion.
The Chair: Thank you for being with us and for sharing those observations and for answering the questions that follow.
Let’s begin with the deputy chairs. I do want to remind my colleagues that we do not have Dr. Fuks for the full hour so we need to be conscious of the time that we have for questions.
Senator Frum: Dr. Fuks, thank you so much for joining us today.
Dr. Fuks, despite our experience with SARS and H1N1, what we learned at the start of the COVID-19 pandemic was that our government wasn’t at all prepared in spite of the fact that the Public Health Agency of Canada was established in 2004 in response to SARS for the precise purpose of pandemic readiness. The creation of PHAC was influenced by the Naylor report, which underlined the importance of strengthening Canada’s public health infrastructure and the need for public health to exhibit broad competence to handle a full range of threats.
Now we have the government proposing that the NRC become involved in the production of drugs or devices. My question to you is this: How do we ensure that 16 years from now, which is the gap between the time of the SARS pandemic and COVID, that the complacency doesn’t set in again and that this capability of the NRC isn’t abandoned due to budget cuts and other forms of neglect, as we saw when Canada got rid of its supply of PPE, or our lackadaisical attitude about the need for vaccine research, as you just addressed in your testimony?
If you permit me — Madam Chair, I know I’m going a bit long — a specific idea to respond to and then I’m happy to hear your ideas, but what do you think about the creation of a standing Senate committee, for example, that would meet once a year to review Canada’s pandemic preparedness or other forms of parliamentary scrutiny of the activities of the NRC?
Dr. Fuks: Senator Frum, thank you for a very insightful and very important question.
If I may just for a second, the cultural backdrop that we all live through is lack of corporate and social memory. We forget all too quickly. As humans, when things didn’t go well, we tend to forget them even more quickly. There is this thing to cope with, and I agree with you.
One approach is to make sure that what you just observed, for example, the response of PHAC or the response that should have been far more robust — if you look at David Naylor’s report that you were referring to, post-SARS in Toronto and elsewhere, the implementation was insufficient. It wasn’t monitored, as you suggest.
Two answers: One, yes, I would welcome a Senate committee, but if I may recommend, it should not focus only on pandemic preparedness. It should focus on the broad reality of research and science and health care. For example, we can focus on PPE, which is important, and forget that antimicrobial resistance is a huge threat for drug-resistant tuberculosis that is not “arriving.” It’s here. I welcome what I saw in the House, a proposal to have a House committee on science policy that would address issues like this. I like your suggestion of a Senate-level committee, but I would ask that the mandate be broader so you can oversee more than pandemics. Pandemics don’t arise from nowhere. They arise from social change. Wait till we see the impact of climate change on epidemics throughout the world.
Lastly, what that committee can also do is say, okay, Canada is going to invest in this NRC, but you can’t invest in NRC as such, as a building, without a strategic plan of how it fits into our entire set of responses, not only for pandemics but health in general. For example, a building is not set up simply to make one kind of vaccine. We need planning. What are the kinds of vaccines we will need? Will this facility be flexible and responsive? Do we have the partners to engage?
I really applaud your idea of a Senate committee to oversee, complement that in the House, but please make the mandate broad enough that you can see the big picture, because if everyone looks at the little fine detail in the surrealist painting, we’re not going to see the big picture — or a pointillist painting, even better. We really do need a broad view, and the Senate is the perfect body, with your expertise and your horizons of memory, to do exactly that kind of job. So I love the idea.
Senator Frum: I appreciate your answer. Thank you very much.
Senator Bovey: Thank you, Dr. Fuks. It’s very interesting. I want to compliment you on your opinion piece on recruiting and retaining talent.
Dr. Fuks: Thank you.
Senator Bovey: As one who comes from the fine art world, I liked your analogy of pointillism just now.
I want to put us back on the international stage. My question is, I hope, simple. I want to know how these new authorities would help NRC and the Minister of Innovation to respond to pandemics and future pandemics, but also to reposition Canadian research on that international stage. This has been an issue of mine right through the EU discussions with Britain leaving and where does that leave Canada’s research students who are doing work overseas.
Dr. Fuks: Yes.
Senator Bovey: How do we reposition ourselves on that international stage? Does this aspect of the bill let us do it?
Dr. Fuks: I think this aspect of the bill, to be honest with you, if it stands alone as the only element, will not accomplish your objective or mine. In other words, we need to see the broader reality.
To put Canada on the map again, on the world stage, the simple number is our investment of GDP into research and development in this country is 1.5% or lower. It slipped. Sweden and Switzerland are 3.3% and 3.4% each. President Biden of the United States has promised to push the U.S. well above 2%.
But leave aside the competition. There is an issue of Canada’s health. It is also, as you point out — and I agree with you — Canada’s rayonnement or image on the world stage. That image is important to, as you suggest, attract the very finest young talent from all over the world who are happy to come to Canada because of all the cultural aspects that we all appreciate and enjoy.
Is it the time to invest broadly? That’s why I say yes, this aspect you’re discussing cannot be seen in isolation if we’re going to succeed. If I may, the importance of the research is to the health of Canadians. It’s not only for companies, and I mentioned some that have been remarkable in their response and responding to innovation. But we also have to establish and look at our examples of hubs of research and recruitment of the finest talent. When I was trying to recruit leadership for departments in my own faculty from all over the world, they didn’t ask me what salary they would have; they asked how many positions I would give them so they could recruit young talent to the department.
We need a broader-based view, which is what you’re recommending and I agree entirely. We must not allow this to happen. Quickly as it did, and it was a quick response, but quick responses tend to be limited. We need a broader, richer and a long-term horizon. As Senator Frum said, what happened to the SARS report of many years ago? Sadly, we’re not going to wait 12 years for the next crisis. It’s going to happen much sooner.
Senator Bovey: In conclusion, the piecemeal approach may or may not tie into your point of this reference, but we should also be taking leadership. It was in the budget to do more with diabetic research and equipment. So you’re right, it is a much broader issue. Thank you, Dr. Fuks.
Dr. Fuks: Thank you, senator. I do like the notion of saying, okay, and I applaud the fact that we are, in the budget, putting money into, for example, pediatric oncology and clinical trials. It’s superb. But that must not be at the expense of investigator-driven, open-ended research. That’s my dilemma. I applaud these focused investments, but not if we’re robbing Peter to pay Paul. It can’t work.
The Chair: Senator Black, did you have a question?
Senator R. Black: I will pass and leave it to my doctor colleagues. If there is time at the end, fine; otherwise, I am fine.
The Chair: I will keep that in mind.
Senator Forest-Niesing: Well, I’m not a doctor colleague, I’m a legal colleague, but maybe I can slip into a bit of a medical context for the purpose of this discussion.
Thank you very much, Dr. Fuks. I found it quite interesting to hear you highlight Canada’s contribution to the quick response to the pandemic.
I’m interested in hearing more about how we can ensure that the measure in this bill serves the intended purpose but is supported by the strategic planning that you’re talking about and that I couldn’t agree more to be essential to ensuring that we get the juice out of the squeeze.
Dr. Fuks: Thank you for the comment. Being a lawyer is not a hindrance in my view. I’ve learned a lot from my legal colleagues over the years, believe me.
You mentioned a strategic plan, and we need one. To give you an example, if you look at the website for this NRC development, it speaks of consultation with industry and with academics. At the same time, I see a photograph that the building is half done. So, to my mind, strategic planning comes a little earlier.
What you as a Senate and a group of experts can do, and as committed citizens, is say, show us the strategic plan, show us the continuity and show us the consultation with academy and with industry. You can’t run, to my mind, a GMP facility — a good manufacturing practice facility — that’s approved by Health Canada and the FDA without expertise from industry, because they know how to do it, if you can imagine the steps to make one of these vaccines.
The academy can certainly contribute. The NRC can contribute. But it has to be a partnership a priori. That, to my mind, is this broad agenda that you call a strategic plan and I call it the broad picture. Senator Bovey, we’re all talking about the same thing, which is to step back and show us the map. Show us the whole picture before we focus on one element of it.
Senator Forest-Niesing: Who would be responsible for developing that? What, if any, contribution would medical practitioners, for example, or representative groups have?
Dr. Fuks: I think there are representatives of groups of Canadian academics and Canadian clinical scientists. We saw the involvement of many of our colleagues in the response to COVID. There were at least two committees counselling the government on vaccine development, another one on testing, a global health committee chaired by Tim Evans. There are many individuals in the Canadian environment. Even this report by the Council of Canadian Academies was a wonderful opening, chaired by Shirley Tilghman, a former president of Princeton. There are many people who are willing to participate.
I cannot tell you off the top of my head the governance structure, which is what you’re looking for, but if it isn’t a partnership, it’s not going to work. It can’t be owned by one of those three parties where the government must be involved, Canadian academics and the Canadian or international pharma industry. Let me tell you, all the wonderful examples that we all know of, Boston’s Route 128, MIT Cambridge and San Francisco, and now in London, they’re all partnershipped either by contiguity or by advance planning, not necessarily by ownership.
Senator Kutcher: To my esteemed colleague, Senator Forest-Niesing, “getting the juice out of the squeeze” is a very medical comment, so thank you for that.
Dr. Fuks, thank you very much for being with us. I’m hearing you say that basic science is not a luxury, rather it’s a necessity for ensuring the health of all Canadians, but that Canada lacks the strategy and funding frame to ensure that that happens.
I’m going to ask a little bit about this new GMP-compliant facility in Montreal. It will be directed toward vaccine manufacturing. However, to my understanding, it is uncommon for one facility to be able to make, at scale, all types of vaccines, and vaccine demands will vary, depending on the emergence or the non-emergence of a viral threat. Could you help us better understand the complexities of vaccine manufacturing and, very critically, what needs to be in place to ensure the sustainability of vaccine-making facilities when they are not dealing with a viral threat and there’s not a huge demand for the product? Would it be smart to have a distributed manufacturing plan in Canada across different regions so that the pandemic doesn’t wipe out one of the sites and we’re gone?
Dr. Fuks: These are very important questions. I can answer some of them, and the others take a lot more planning and thought.
For example, there are, as you suggest, a variety of vaccines, and they are rather different in the demands for manufacturing, from flu vaccines traditionally cultured in chicken eggs to these very complex RNA vaccines that require 300 different ingredients, including the liposomes from Canada. Pfizer, when they make it, needs three sites across the world for quality control. In between are adenoviral vaccines, protein vaccines and so on. I don’t know enough about the manufacturing side, but I would find it surprising if we can have one-size-fits-all.
The second point you’re making is very crucial. Happily, pandemics occur but they’re not frequent. So what do you do with such a facility in between? Do you make flu vaccines? Do you contract for others? I would suggest that we cannot make that decision alone. We have to talk to the pharmaceuticals, who in the last year found out where the shortages are in manufacturing, and they are now marvellously collaborating, where Merck and Sanofi are collaborating with other vaccine makers. Even for things like filling vials and sending them out takes a certain engineering skill.
On the question of whether we can do it in a distributed fashion, possibly, with advanced planning that says here is a certain expertise for one kind of vaccine and here is some expertise for another. Are they so different that we could profitably put them in different places? But don’t forget, each of them has to be busy with some activity year-round. I believe we can only do it in partnership with big pharma. As you well know, they are not my favourite kind of people, but that’s for another discussion. But they are important to this kind of effort. Pharma could not have made these vaccines without the scientists I enumerated, but the scientists alone don’t have the skill set to make a vaccine. I need to see this long-term thinking and this collaboration that you’re alluding to. Yes, perhaps we could do it at multiple sites, but we need to figure that out. Even Connaught that made the vaccines, and way back in the 1920s made insulin, did it in collaboration with Eli Lilly, and it worked beautifully. Then it was fallow for many years and then Sanofi took it over.
We need to plan ahead so that we don’t end up with very expensive facilities that are lying fallow waiting for an epidemic, but when it hits, the equipment will probably be outdated. So we need to renew. We need to think about constant usage. Honestly, the pharmaceutical also has the strength of numbers, right. They can amortize the investment over many different vaccines, some of them destined for Europe, for Africa, for Australia, and we shouldn’t think only of Canada as the narrow focus. We do need an international framework to make this work.
The Chair: Thank you for this.
[Translation]
Senator Mégie: Thank you for your testimony, Dr. Fuks.
My question comes from someone who is concerned about sending vaccines to less affluent countries. I would like to know if temporarily suspending patents would be a solution to facilitate the shipment of these vaccines or if it would be just one part of a group of solutions.
[English]
Dr. Fuks: Thank you for the question. It is very apt right now, as you well know, and I think you hit a very important point, senator.
The question of patent rights is only one element. In fact, those have become the surface elements, and I am worried that that surface debate will dissuade us and steer us away from the right discussion that we need right now, which is where do we need to send the excess vaccines throughout the world. The developing world is the obvious example. We all see it on the nightly news. I am worried we will spend months and months discussing patent rights when what we should be doing is sending the vaccines we do have all over the world. They were paid for by taxpayer dollars, by and large. I think that licensing deals can be arranged. I am worried, as you are suggesting, that the question of patent rights is the wrong focus for this discussion. It is a tiny element, but we need to be worldly. We need to reach out. We need to be social citizens of the world and say, who needs help? Believe me, if we need to help, to my mind, patents will never be a barrier. We can do it in different ways. By the way, we can sell or licence the patent to anyone, but not anyone can make those vaccines. So unless the companies wish to transfer technology, patents alone won’t work. I would rather right now they transferred vaccine that’s ready to be injected.
Senator Moodie: Dr. Fuks, thank you for your presentation today.
I feel like a child in a candy store. I have so many questions to ask you, but let me start with this one. You talked about cuts to open research and the fact that many of the resources were shifted to applied science, but in fact basic research is fundamental to innovation. As we have suffered over this period with the pandemic, we’re now talking about building a capability to produce vaccines and other drugs.
My question to you is this: How can we build a synergy between basic research — once we fund it correctly — innovation and our supply chains that will enable us to keep these biomedical facilities open and operating in a way that keeps them viable and sustainable in between the outbreaks and the need for sudden surges in the need for particular drug production?
The second question that I want to put is just a little bit different. Although we are not a significant biopharmaceutical manufacturer, Canadians produce a significant volume of intellectual property. How do we convert this intellectual prowess into health technologies that benefit Canadians?
Dr. Fuks: Senator Moodie, those are wonderful questions and they’re all important.
As I said, I support the idea of certain kinds of focused research, but as you suggested and I agree, fundamental research is, in fact, called fundamental because it is. It is foundational. So I look at the examples that have worked. I mention the hubs. Management scientists have shown us that the pharmaceutical industry invests in certain geographic areas, you know, San Francisco, MIT and so on. Why do they do that? Because there is contiguity to research institutes, academics, to universities, and we have lots of good ones. They like a cosmopolitan, high-quality environment, and many Canadian cities can provide that. They want a rich supply of skilled workers, which we have. They need contiguity with prestigious universities.
As one example, Merck Europe has in August announced a $1.32 billion 220,000 square-foot facility in central London called the Knowledge Quarter. Their VP of research says:
We are excited about being close to world-leading universities and hospitals in London — many with whom we already collaborate. . . . Our internal research matches the best external science.
This collaboration we had, I will remind you, in the west island of Montreal and in Mississauga and other places, and we had at the time colleagues from Merck who had appointments in my medical school and students were going back and forth. We need to attract pharma with what they need. They don’t need our money. They need our talent, our ideas and contiguity, collaboration and connectedness. That’s why they come here. That’s why they stay. Our example was terrific. We had one of the jewels, BioChem Pharma, if you remember, in Laval, Quebec. Then Shire of England buys them, closes the facility of BioChem Pharma. Where do they go? Cambridge, next to MIT. We, too, can supply it, but we cannot supply it unless our own basic research infrastructure is stable and there’s a pathway for talent. Career scientists can’t work from one budget to the next. They must see a longer-term horizon.
I’m sorry it is a long answer to your important question. By investing in basic science, high quality across the country, with some stability for career development, is the best way to say to pharma, “We don’t need your money. We want you here because this is what we are offering.” This is our dowry, which is the word I use to describe this relationship we are ready to offer.
Senator Moodie: In my discussions with pharma over the past year and a half, I’ve been told this readily, that in fact that’s what they’re interested in, in Canada. That’s what attracts them to Canada, the high level of intellectual, academic prowess linked to innovative research.
Dr. Fuks: Precisely.
Also, sadly, as one of your colleagues mentioned, we’ve been discussing the question of patent rights in both issues, but patent rights are not the issue. The issue is exactly what you said: They want collaboration, and they know they have it, but we can’t have it if our investment in research has a zero increase to the base fundamental budget year over year. We need students to see their role models succeed and not get disappointed because they don’t have the research funding.
There’s something about a sense of aspiration and excitement in a country like ours that says, “We’re ready to invest in the future of science.” In other words, in our traffic throughout the world, besides natural resources that we have, we have wonderful natural, geographical and human resources, so our traffic should be in ideas and talent, not simply or not only in mineral rights.
[Translation]
Senator Moncion: The government is proposing to amend the National Research Council Act to allow for the incorporation and the acquisition of shares in a corporation. Could you comment on the merits of this change in the context of research, patents, and copyright?
[English]
Dr. Fuks: Thank you for your question.
I must admit that your question is better answered by one of your legal colleagues, but let me approach it my way. Seeing this as an issue of shares in corporations misses the point, in my opinion. The point is this: Where does this fit in a strategic plan for research across Canada? How does it fit the Naylor report and other reports about fundamental research in the country?
I can’t honestly understand the rationale myself. I read clause 28, and it talked about shares in companies, but what does that really mean? Are we setting up our own companies? Are we collaborating with others? But I’ve learned that if you start with the governance rather than the mission, we are starting at the wrong end of the plan. Let’s develop the idea, the concept and the broad framework, and then we can consider whether shares are the right approach.
So I can’t honestly answer “yes” or “no” because I’m not sure what the objective is of this idea of having shares and how it fits. I’m sorry, but it is a more technical corporate question. I think we need to deal with the substantive one first and then worry about structure. In a sense, the old line is that form should follow function, and we’re not doing that.
Senator Moncion: Thank you.
I just want to say that I think there have been collaborations with researchers. At some point, researchers will create their own companies and they will have investment. I think that’s what was behind this change, but I just wanted to hear your perspective on that, so thank you.
Dr. Fuks: Sure. I agree with that, senator, but even today, researchers can set up companies. AbCellera in British Columbia has produced monoclonal antibodies being used to treat patients with early COVID. The investment capital is there in some parts of our country. So investigators and bright scientists can set up companies. I’m not sure why that part of the bill is necessary to expedite that kind of activity. That’s the part I am not clear on.
[Translation]
The Chair: Thank you very much to our guest for answering our questions.
[English]
This was very interesting. I trust we will have the opportunity to welcome you again on some other occasion in the future. Thank you so much for being here.
[Translation]
Dear colleagues, if there are no objections, our meeting will proceed in camera.
(The committee continued in camera.)