Income Tax Act

Consideration of Subject Matter in Committee of the Whole

November 17, 2020


The Chair
[15:01]

Honourable senators, the Senate is resolved into a Committee of the Whole on the subject matter of C-9, An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy).

Honourable senators, in a Committee of the Whole senators shall address the chair but need not stand. Under the Rules the speaking time is 10 minutes, including questions and answers, but, as ordered, if a senator does not use all of his or her time, the balance can be yielded to another senator. The committee will receive the Honourable Chrystia Freeland, P.C., M.P., Deputy Prime Minister and Minister of Finance, and I would now invite her to enter, accompanied by her official.

(Pursuant to the Order of the Senate, the Honourable Chrystia Freeland and her official were escorted to seats in the Senate chamber.)

The Chair
[15:02]

Minister, welcome to the Senate. I would ask you to introduce your official and to make your opening remarks.

Hon. Chrystia Freeland, P.C., M.P., Deputy Prime Minister and Minister of Finance
[15:03]

Good afternoon, honourable senators. Thank you for this opportunity to speak about Bill C-9 at this critical moment in Canada’s response to the COVID-19 pandemic.

I have with me today Andrew Marsland, Senior Assistant Deputy Minister of the Tax Policy Branch at the Department of Finance.

From the beginning, our government has been guided by two overriding objectives. The first has been to protect the lives and health of Canadians, and the second has been to preserve and protect Canadians’ jobs and livelihoods. We have been guided throughout by the knowledge that the best economic policy is a strong health response. That is the purpose of Bill C-9 and the reason why it deserves our urgent support.

Honourable senators, we are in the midst of the second wave of the pandemic. Winter is fast approaching. December rent will soon be due. We need to act quickly.

We know that slowing the spread of coronavirus comes at a cost for the economy, for Canadians, and for businesses, charities and not-for-profits. That’s why the federal government will continue to provide financial assistance so that we can take proper health precautions.

Canada is well positioned economically to provide this much-needed support. We began the year with the strongest fiscal position in the G7. Today, even after accounting for the unprecedented actions we’ve had to take in 2020, Canada continues to have the strongest fiscal position in the G7.

Through new targeted support measures, Bill C-9 would provide employers with the support they need to weather this crisis and keep people on their payroll.

Please let me tell you a little bit about the measures we are proposing.

First, Bill C-9 will implement the Canada Emergency Rent Subsidy. This subsidy will provide rent and mortgage support until June 2021 for businesses and other organizations that have lost revenue as a result of COVID-19. The subsidy will cover up to 65% of rent or mortgage interest for the businesses that have been hardest hit. Furthermore, tenants will have direct access.

Second, Bill C-9 proposes a new lockdown support measure of 25%, over and above the 65% subsidy for organizations whose operations are significantly restricted by a public health order. This means that some qualifying organizations could have up to 90% of their rent covered.

Third, Bill C-9 would extend the Canada Emergency Wage Subsidy until June 2021, as we committed to do in the Speech from the Throne.

I know senators have been concerned about an amendment that was put forward to address the eligibility of rent payable under the new rent subsidy. As I believe you know, we have an interim solution to ensure that rent payable will be an eligible expense from day one. As I mentioned to the Senate committee last week, after Bill C-9 is passed, we will publish and quickly introduce legislation to formalize rent payable as an eligible expense. We are confident that the Canada Revenue Agency will consider rent payable as an eligible expense from the moment the new rent program is launched. There will be no delay. We have indicated to the CRA that this is our intent, and we will formally commit this to the CRA if and when Bill C-9 becomes law.

We know that this crisis will leave a mark, but we all have to do everything in our power to limit the number of jobs lost and the number of businesses that permanently close their doors. These support measures are not only the compassionate thing to do, they are also the pragmatic thing to do.

Senators, it is within our collective power as legislators to help Canadians and Canadian businesses make it through this pandemic. That is what we must do, and what we must do without delay.

We here in Canada are, I believe, at a critical point. There is now light at the end of the tunnel with the prospect of effective vaccines, but we also face the hardest part of winter just ahead, and the second wave of the coronavirus is truly here in much of the country.

We must act now. Small businesses —

The Chair
[15:12]

Minister, five minutes have run. Before we move to questions and answers, colleagues, I ask you reduce your preambles to your questions, and Madam Minister, that you give direct answers to the questions.

We are starting the first 10-minute block with Senator Plett, Leader of the Opposition.

Senator Plett
[15:13]

Thank you, chair. That may not allow me to make my preamble.

Welcome back, minister. I was reflecting on your last appearance here. With great respect for your office, I hope that this time will be a little more valuable to those of us who are asking questions. The last time you were here, minister, you took 20% of my speaking time talking about things I had not asked about. You had very few answers for us and suggested that since the bill had passed unanimously in the other house, we should just very quickly do the same thing here.

Yet this was not at all what happened, minister. The bill passed unanimously only because your government introduced a programming motion and cut off debate, and opportunities for any amendments. You threatened — I’ve got 10 minutes — you threatened and coerced members into supporting it unanimously. It was not an indication that they supported the way you handled your affairs over there.

I am hoping that this is not how you plan to conduct your answers here today, because we have many important questions — and they will be coming — which need to be answered before we pass this bill.

You are forcing us again into a very tight timeline because your government failed to heed the advice of our party six months ago and fix the broken rent assistance program. Now that you have finally gotten around to fixing the program, you failed to get the legislation right and needed to introduce an amendment — you’ve already spoken about it — but you also failed to get the amendment right. Now you are rushing us once again to pass the legislation. Once it is passed, it will need to be immediately amended — and even then it will still fall well short of what is required — but you are simply saying, “Trust us.”

When your predecessor was in front this chamber and I asked him questions, and asked for explicit answers, he asked the chair whether he needed to answer those questions and what our process in the chamber was. He was told by the chair that senators ask questions and ministers answer them.

That is the process that I trust we will follow today. I will ask specific questions which I will give you in their entirety. These are questions which were asked of you, and/or your predecessor, for which I don’t yet have concrete answers. I would appreciate, minister, explicit, definitive answers from you. If you are not able to give me those answers at this time, I will ask that you provide those answers in writing before we are expected to vote on this bill on Thursday.

Minister, just about an hour ago, we received Bill C-9. Already this morning the Prime Minister was calling for quick Senate passage of Bill C-9. We didn’t even have the bill yet, and he wanted us to pass it.

In 2014, Liberal leader Justin Trudeau said:

If the Senate serves a purpose at all, it is to act as a check on the extraordinary power of the prime minister and his office . . .

Now that he is in office, the Prime Minister is trying to shamefully use the pandemic to avoid accountability. This is another example of the lack of respect for parliamentary accountability, process and the independence of the Senate.

The government is responsible for setting the legislative agenda. They have prepared flawed legislation. They have prorogued Parliament in an attempt to cover up their WE scandal, which caused more delays. Let’s be clear, minister — the Trudeau government is the one that needs to do better.

Our Finance Committee spent the entire break week pre-studying this bill. The Conservative Party of Canada will continue to support small businesses and ensure they get the support they need. Perhaps, minister, the Prime Minister is now realizing the value of having a mechanism like a Liberal Senate caucus — as was part of the national caucus — that he could count on to move his legislative agenda forward.

That’s my preamble, minister, and here are my questions. You can answer as many of them as you can before the chair cuts you off, and you can send us the rest. We are happy to send them in writing if you need.

How much has been spent on COVID measures so far by this government?

How much has been spent by Crown corporations, including loan guarantees?

How much is the debt of the federal government as of today?

What is the total debt of provincial governments as of today?

What percentage of the federal government debt is owned by foreigners, and what percentage is owned by the Bank of Canada?

How much of the federal government debt is for a term of less than one year, for a term of one year to five years, and for a term longer than five years?

What is the average interest rate payable on the federal government debt?

My next question is a question that Pierre Poilievre tried to get out of people in the house, and maybe it was even out of you that he was trying to get the answer. How much will an increase of 1% on interest rates on this debt cost the federal government?

Finally, how many corporations made an application for the LEEFF program, and how many applications were accepted?

I think you probably have almost five minutes, minister.

The Chair
[15:19]

No. Madam Minister, you have three and a half minutes to answer. Thank you.

Ms. Freeland
[15:19]

Thank you very much, both for the preamble and for the question, senator. Let me work my way through them.

When it comes to money that the government has spent so far, I am very happy to give you our estimates of the costs of the programs that I’m asking you to review, and maybe I’ll start there. I think that’s very appropriate. Our estimate is that the emergency rent subsidy which we have put before you, including the lockdown support, will cost $2.2 billion. That is between now and the period we are discussing, so to December 19. Our estimate is the Canada Emergency Wage Subsidy, which we are asking to be extended until the summer of 2021, but we are proposing that the rate be set at 65% until December 19, so our cost estimate now is until December 19 — that set-rate date — that we will spend $65.5 billion on the wage subsidy.

There are, of course, future periods, but I’m not going to offer estimates on those because we don’t yet know what the rates will be, but as I have said, we are committed to having these two measures in place until June 2021.

In terms of the government debt, I am not, senators, going to offer new figures today. I will be providing you, Parliament and Canadians with a fall fiscal update in the coming days and that will include details of our spending so far and detailed fiscal projections.

What I am delighted to do is to remind you of figures that the government provided in the Economic and Fiscal Snapshot. When we provided the Economic and Fiscal Snapshot, we projected that the 2021 deficit would be $343.2 billion, and we projected a debt of $1.06 trillion. As I said, I will offer up-to-date figures with the fall fiscal snapshot, but I will not be offering them today.

On the other questions, let me go through the ones I can. In terms of government debt right now, let me say a few things. As senators know, Canada today has a very favourable credit rating. We are rated AAA. As I said in my preamble, we have the lowest debt-to-GDP ratio in the G7, and the interest charges on Canada’s debt as a share of our economy are today the lowest they have been in 100 years. That is notwithstanding the extraordinary expenditures which we have undertaken to fight COVID.

So I very much —

The Chair
[15:23]

Minister, I’m sorry but we have to move to the next block of 10 minutes.

Senator Dasko
[15:23]

Minister Freeland, welcome back to the Senate. I want to offer my congratulations to you on your appointment as finance minister and the first woman to be in this role. My congratulations to you.

Minister, a recent survey from the Canadian Federation of Independent Business found that 70% of businesses in our city of Toronto say that they don’t have the finances to make it through another lockdown. Your government has provided significant capital to small and medium-sized enterprises through the Canada Emergency Wage Subsidy, which appears to be an effective tool to support Canadian small business. The Canada Emergency Commercial Rent Assistance program, on the other hand, was flawed and is now being replaced. We’ve all heard of businesses that were unable to receive support because their landlords would not apply for the program and others that did not qualify because they did not meet the revenue-loss threshold.

The Canada Emergency Rent Subsidy is a good response to the complaints about the rent assistance program. However, for many it is arriving too late. As I understand it, the legislation is drawn up to allow eligible organizations to submit an application to the CRA up to 180 days after the qualifying period for which they are seeking support.

Why are you limiting the start date of this program to September 27? Why can you not move the start date of this program back to help those businesses that fell through the cracks of the previous program? For example, it would seem to me you could easily move it back 180 days. Just as you have taken the program to go forward more or less 180, you could take it to go back 180. That is my question to you about the way you’ve structured this program: Why can’t that start date go back and help those people who were hurt during that period?

Ms. Freeland
[15:25]

Thank you very much for the question, senator.

[Editor’s Note: Ms. Freeland and Senator Dasko spoke in another language.]

It’s a very important question that you ask and something that I have wrestled with. Thank you also for citing the work of the CFIB. Dan Kelly is someone we have talked to a lot in working out this program.

Senator, our government’s focus in putting this program together has been to ensure that as many Canadian businesses as possible can keep going. The focus is on today and tomorrow. The focus is not on yesterday. And I am aware that there are businesses which wanted to take advantage of CECRA but were unable to because of the positions their landlords took, and they have great sympathy from me. But, ultimately, given that government resources are limited — we’re doing a lot but I think we all realize our resources are limited — the right thing for us to focus on is the going forward, and the right thing to focus on is looking at businesses that are viable today, that are still operating and to give them the support they need to get through the rest of this pandemic.

I would point out that if senators approve Bill C-9, businesses will be able to get access to the following: In our city of Toronto, where restaurants are subject to a local lockdown order, 90% of their rent will be covered, for example; 65% of wages would be covered if they are making revenue losses of 70% or more; and we are also putting forward a top-up to CEBA, so that businesses will be able to get an additional $20,000 CEBA loan, $10,000 of which will be forgivable. That is really considerable support, and I think it should help our businesses get through the second wave of the pandemic.

Senator Dasko
[15:28]

Thank you. That’s very helpful. I have another question. Minister, in this past summer, your government advanced $19 billion to the provinces under the Safe Restart Agreement. These expenditures were important and necessary to help the provinces provide vital services, and this is especially important now because we are in the second wave of the pandemic.

In the Speech from the Throne, your government promised to include national standards for long-term care in your agreements with the provinces. However, I have reviewed the Safe Restart Agreement as it has been published, and with respect to long-term care facilities I see that increases in staffing levels were mentioned in some of those agreements, but actual staffing standards were not addressed in those agreements. Experts have made it clear that improving the standards for staffing, including better training, employment equity, better pay and higher ratios of staff to patients will improve the standards of care.

My question is as follows: Where are the national standards for long-term care that were referenced in the Speech from the Throne? Are investments in increased staffing in some of those agreements your government’s response, or is there more to come from the government with respect to these standards? And if there’s more to come, can you tell us what those staffing standards might include?

Now, obviously, this is very relevant today as we see, with the second wave, seniors’ residences across the country experiencing outbreaks, with mortality rising and great hardship for many seniors. That is my question. Thank you.

Ms. Freeland
[15:30]

Thank you very much for that question. I think all of us are tremendously concerned by what is happening in long-term care facilities across the country. We have seen that this is really a weak spot across the country. I really think it’s a national tragedy and a national shame that so many of our elders are dying of the coronavirus. We are seeing with the second wave that long-term care facilities continue to be a point of tremendous vulnerability.

When it came to the Safe Restart Agreement, our objective, working very collaboratively with the provinces, was to give them the additional resources that we felt they needed to get ready for the second wave. We took a very collaborative approach and set out some clear categories where we knew support would be needed — long-term care was one — and some areas where we believed there should be a focus. However, we’re also very mindful that, with the Safe Restart Agreement, we were providing federal funding for areas of provincial jurisdiction.

When it comes to national standards for long-term care, there is a broad national agreement today that we need to have that in Canada, but none of us should minimize the amount of work it’s going to take to get those standards. To have standards that work for the country, to have standards that have real buy-in from all levels of government is going to require a real process of discussion and negotiation between the provinces, territories and the federal government. We need to do it. We will do it. I believe we need to do it properly.

In conclusion, senators, I will say that while it is some slightly longer-term work needed to get real standards in place to raise long-term care in the country to a new level, there is an urgent need for action and improvement today. The federal government is providing people from the Red Cross right now across the country to support people living in long-term care facilities. As well, we’re working actively with the provinces to discuss whether there are other types of support they need to protect our elders.

Senator Tannas
[15:33]

Minister, some senators who attended the committee meetings did not feel that they got a satisfactory answer with respect to how we and the government found ourselves in this position of having a bill that is flawed and can’t be amended.

So, from one Albertan to another, plain talkers, what happened? We’re interested in developing a committee that will look at the lessons learned from COVID. This will be something we’ll possibly pause on. For the sake of all of us, could you tell us how this fix is needed and how it got missed? How did it get missed?

Ms. Freeland
[15:34]

That’s a really good question, senator, and I’m happy to talk about it.

Let me start by saying what is most important to me is that we will, provided this legislation is supported by senators here, be able to put in place a rent-support measure where rent payable is accepted immediately, as soon as the measure enters into force. From the point of view of the people I care about most — an actual business — there will be no interruption in the support they get. That is point one. It’s a very valid question.

In drafting all of these business supports — an unprecedented degree of support is being provided by the federal government to an unprecedented number of businesses — we strike a balance between getting the support to the businesses who need it as quickly as possible and taking a generous approach toward those businesses and their needs. At the same time, it’s important that programs have integrity. It’s important to set in place eligibility requirements that give the government, the CRA a confidence that the businesses asking for the funding are truly eligible for it.

Obviously, rent that has already been paid — and proof that the rent has been paid — is a level of proof with a very high degree of integrity. You know that the business used the money to pay the last month’s rent. A rent-payable requirement is more complicated for the CRA to enforce with the same degree of confidence. That’s the trade-off in coming up with how the program ought to work.

Having said that, given where we are in the pandemic, given how long it has gone on, given the difficulties businesses find themselves in, I was persuaded — we were persuaded — that we should offer this more flexible option for businesses. I’m glad that, although perhaps not in the most elegant way, we will be able to provide that support to businesses.

Senator Tannas
[15:36]

It was not that anything got missed on purpose. You said this is the way you want to go, or you were provided with advice. It’s kind of comical when you think about it; we are providing cash so people can pay their rent and suggesting that they have to pay the rent before they get the cash. That’s a “who’s on first, what’s on second” kind of program. But it was not that something got missed. This was a climbdown from the original advice, given the circumstances on the ground and the feedback that you got from, undoubtedly, lots of good people.

Ms. Freeland
[15:37]

Senator, speaking frankly as one Albertan to another, I probably wouldn’t use words like “climbdown” and “comical.” I work with the CRA every day. We have Andrew Marsland here who has worked very hard to make the rent payable work. It’s a really difficult balancing act for the people at the CRA. These are people who are highly ethical. Their whole motivation is to ensure that the money goes to the right people. I value and respect those concerns that they have.

Having said that, we’re living in unprecedented times. We need to do some things a bit differently. I would like to say to all senators here, we all need to be aware — and I know that you are — that difficult balances need to be struck very carefully in delivering these supports to Canadians.

Senator Tannas
[15:38]

Fair enough. Thank you. I’ll surrender the rest of my time to Senator Dagenais.

Senator Dagenais
[15:39]

Minister, since the start of the pandemic, every one of the government’s bills to help Canadians has raised concerns in connection with the potential for fraud. I believe the government’s measures in that regard are pretty feeble. Canadians have had their identities stolen by fraudulent CERB claimants. So have business owners. The police are being flooded with complaints, but the government doesn’t seem troubled by the situation.

Early on, the state of emergency might have justified this lack of vigilance, but nine months into the pandemic, it’s not really an emergency anymore. Dare I suggest that the problem might be incompetence?

My question is very simple. Is the government deliberately leaving tough fraud prevention measures out of its legislation, or are these bills just being drafted by intellectuals who have no concept of security?

Ms. Freeland
[15:40]

Thank you very much for this question. I think your question is a great follow-up to Senator Tannas’ question. As I tried to explain, with our measures, we are attempting to strike a balance between ensuring the integrity of the programs and addressing the current significant needs of Canadians and our businesses. It is difficult to strike this balance.

I believe that we must respond urgently because the needs are urgent. At the same time, I want to assure you that we have put a great deal of thought into this. We’ve created programs to establish criteria, such as the rent program we were just discussing, criteria that the Canada Revenue Agency believes in, strong criteria that allow us to obtain facts and evidence.

We are trying to strike a balance. On the one hand, you expressed concern about fraud and, on the other, there was the question from Senator Tannas from Alberta, who said that we must respond urgently and give businesses what they need today. We are trying to strike a balance, and I believe we have succeeded.

Senator Dagenais
[15:42]

Minister, you know that criminal organizations are taking advantage of loopholes in the programs. This bill also has loopholes. We know that there is a great deal of identity theft going on. Criminal organizations are often behind these identity thefts, and they are exploiting the current programs. These organizations will surely take advantage of the programs in Bill C-9 that will be implemented. You’ll have to be extremely vigilant when drafting future bills, or else give us more time to study them so we can make the necessary amendments to make them even more secure.

Ms. Freeland
[15:42]

Once again, thank you for the question. We must be vigilant, and we have put measures in place to ensure the integrity of the programs. I would like to acknowledge the professionalism of the Canada Revenue Agency’s employees. They’re doing an excellent job. They paid out the funds, and they’re ready to do the necessary checks afterwards. At the same time, I think we need to acknowledge that we are in the midst of a pandemic and that we are —

The Chair
[15:43]

Minister, we must move on.

[15:43]

I’ll be sharing my time with Senator Bernard, chair.

Minister, welcome to the Senate of Canada. I understand that the CRA will be administering the rent subsidy program along with administering the wage relief program. I think that’s the right decision to be made.

But, minister, has the department received additional resources from the government, because it is a huge job to administer both of these programs in a timely manner? If so, could you let us know what kinds of timely resources have been provided so that the programs can be administered on time?

Ms. Freeland
[15:44]

Thank you very much, senator. That’s an excellent question. I’m not going to go into the specific details, but I am very aware that the CRA is doing a monumental job right now supporting all of Canada. I am very grateful to the CRA, and our officials are right now in discussion with the CRA to ensure that the CRA has all the necessary resources to do this important work.

They are doing a heck of a job, and you’re absolutely right to point to the fact that we all need to be assured they have the resources, both human and in terms of technical platforms to do that work.

[15:45]

Thank you. My second question has to do with the response to the previous rent subsidy program. It required landlord participation and, at that time, I understand that landlords were hesitant to participate. I wonder if you could let us know why this was and whether those concerns have been dealt with in this particular piece of legislation.

Ms. Freeland
[15:45]

With the previous program, CECRA, it’s important for us to note that nearly 140,000 small businesses that employed 1.2 million people did benefit from CECRA, so that provided some real support to businesses and to their workers.

The new program goes directly to tenants, so it doesn’t require landlord participation. It may be worth emphasizing that, under this new program, mortgage interest payments will also be an eligible expense for businesses. If you have bought your property and are paying a mortgage on it, you can claim for the interest as well.

[15:46]

Thank you.

The Chair
[15:46]

Senator Cordy, do you have any other questions?

[15:46]

Senator Bernard has the rest of my time.

Senator Bernard
[15:47]

My first question is a follow up to Senator Cordy’s question and your response, minister. You said that a number of businesses were supported in the previous legislation, and I’m wondering if you have race-based data and if you could tell us how many of those businesses that did receive support previously were racialized businesses. In particular, I’m interested in how many were Black-owned businesses.

Ms. Freeland
[15:48]

Thank you very much for that important question, senator. Together with my colleague Ahmed Hussen, I was lucky enough to participate in a round table with some Black business leaders talking about Black entrepreneurship and the coronavirus response.

I don’t have that breakdown for the CECRA support, but I do agree that we as a government need to do a much better job of collecting disaggregated data. I’m also very pleased that the Prime Minister and Minister Mary Ng were able to announce a special fund for Black entrepreneurship a few weeks ago. That is something I discussed this morning with the Prime Minister. He is very keen for us to get it up and running very quickly, and we’re working on that.

Senator Bernard
[15:49]

Thank you, minister. Now for the question I wanted to ask today: COVID-19 has amplified existing inequities impacting Black communities. In the Toronto Fallout Report: Half a Year in the Life of COVID-19, 39% of Black Canadians indicated that the pandemic had a strong or moderate impact on their ability to meet their financial obligations or essential needs.

I commend the support given to Black business owners and entrepreneurs through the Black Entrepreneurship Program. However, I am hearing from black-led community and business organizations that the process of gaining access to the funds, and the application processes themselves, are very cumbersome. Many state that they cannot afford to wait for the government to issue a call for concepts for the National Ecosystem Fund and the Black Entrepreneurship Knowledge Hub. Black business owners are tired of being an afterthought, and they need support now.

Minister Freeland, how will the government ensure that black Canadians have equitable access to timely relief, and that their voices are included during the development of an equitable recovery?

Ms. Freeland
[15:50]

Thank you again, senator, for that really important question. Let me kind of try to answer it in parts.

First of all, thank you for that very specific feedback about the programs. I agree with you that there is an urgent need to get those programs up and running, and to make the process of getting access to them as smooth and quick as possible. That’s useful feedback, and I will follow up on it with my colleagues in cabinet.

In terms of the broader response, I think that we need to be aware that COVID — both in terms of the health impact and the economic impact — has not touched all Canadians equally. Racialized Black Canadians have been hit harder, and we need to be aware of that, both in the support programs that we’re providing to get through coronavirus, and we will also need to be very mindful of that in the measures that we put in place in what I think of as our COVID recession recovery plan, which we are working to design right now.

Senator Bernard
[15:52]

Thank you very much.

The Chair
[15:52]

Senator Bernard, you still have two minutes.

Senator Bernard
[15:52]

It’s fine. Thank you.

The Chair
[15:52]

Okay. Then we will move on to the next block of 10 minutes.

This block will also be shared between Senators Carignan and Marshall.

Senator Carignan
[15:52]

Minister, my question follows up on Senator Tannas’ question regarding the amendment put forward to make rent payable an eligible expense so that people can claim an amount for rent, even if they haven’t paid it, in order to respect their ability to pay.

You introduced an amendment in the other place at third reading, but it was rejected. You’re just saying that the Canada Revenue Agency heard you, that it heard your comments and that it will take them into account when it processes claims for reimbursement.

Don’t you think such comments are somewhat disrespectful towards Parliament, towards both chambers and particularly towards the Senate, where it is perfectly possible to propose an amendment and bring a bill into line with your ministerial intentions, rather than letting public servants implement the law as they see fit?

Ms. Freeland
[15:53]

Thank you for the question, senator. I have two answers for you. First, and it is up to each senator to decide, I think we are in an urgent situation. When I talk to businesses — and I think you hear the same things I do — they tell me that they need help now. That is why all of us, senators, MPs, public servants, as well as the people working at the Canada Revenue Agency, need to do things a bit differently than we normally would.

That is why I think the best thing to do is to support Bill C-9 in its current form. We’ve done a lot of work with the Canada Revenue Agency. I’m confident that businesses will get what they need, and that’s what matters most to me.

As far as respect for Parliament, the House of Commons and the Senate is concerned, we’re going to propose an amendment, and I hope it will get support from the House of Commons and the Senate. Nevertheless, I don’t think our businesses can wait.

Senator Carignan
[15:55]

I think you’re making this more complicated than it needs to be. Your former colleague, Minister Morneau, previously proposed an amendment in this chamber through the Leader of the Government, seeking to change a flawed budget bill. It was adopted in the Senate and sent back to the House of Commons, where it was passed. It would be perfectly possible for you to ask your Leader of the Government to propose this amendment, which would be adopted here then sent back to the House of Commons. Then we would have a complete bill, instead of a bill full of holes that public servants would yet again be responsible for filling.

Ms. Freeland
[15:56]

Senator, the process you’re describing is obviously perfectly possible. However, if we proceed in that fashion, our businesses will have to wait even longer. I think that, seeing as we’re in the midst of a pandemic and facing a second wave, we need to take action now and give businesses the help they need.

I understand that you’re worried about businesses that want to use the federal government support for rent payable. I agree with you, which is why I’m happy to assure you that the bill before us will ensure that these businesses get the help they need. That’s what matters most to me.

Senator Carignan
[15:57]

I don’t think we’re going to agree.

I have another question. During your last appearance, I asked you when you planned to present an economic and fiscal update. Quebec just released one, as did Ontario. Around $400 billion was estimated —

The Chair
[15:57]

Senator Carignan, your five minutes have expired. I must move on to Senator Marshall.

Senator Marshall
[15:57]

Thank you very much, Madam Chair. Welcome, minister, to the Senate of Canada.

Minister, this bill provides for a wage and rental subsidy for businesses up to June 2021. However, the bill sets out the rates and formula for determining the amount of subsidy a business will receive up to December 19 only. The rates and the formula for calculating the amount of subsidy to be received for the periods after December 19 will be set by regulation.

Minister, December 19 is a mere four weeks away and, as you say, winter is coming. Businesses have no idea what their subsidies will be after December 19.

Last week, witnesses at the Senate National Finance Committee testified that uncertainty is one of the biggest problems businesses are facing right now. Given that businesses have yet to be informed as to the rates and formulas for the calculation of their subsidies after December 19, when can they expect to see those regulations? Could you give us a date for that, minister, and also the date for the next fiscal snapshot? Thank you very much.

Ms. Freeland
[15:59]

It’s a very good question, senator. Let me offer some insight into our thinking around setting the rates until December 19 but not beyond that. It was quite an intentional decision.

I agree, senator, uncertainty is very difficult for businesses to live with, but the reality is the course of the coronavirus is innately uncertain. We are living through a second wave of the coronavirus, whose intensity today was not predicted by everyone and whose future course is impossible to foresee with certainty. Likewise, it is impossible for us in the federal government to know for sure what measures different provinces, municipalities and public health officers will take across the country. These two things, the course of the coronavirus and actions taken to fight the coronavirus, which I strongly support, will have a big impact on how much support businesses need through the winter. We have judged that the best course of action is to leave some flexibility. If things get worse, then the government will be in a position to offer more support. If we can flatten the curve, and everyone can get back to work and the economy continues to recover, then we will be able to offer less support. That’s the reason for that thinking.

In terms of when the levels for the next periods will be set, let me say that in the coming weeks — I am not going to offer a specific date — but we do know that December 19 is coming soon.

Senator Marshall
[16:01]

Thank you. Can you also give us a date for the next fiscal snapshot?

Ms. Freeland
[16:01]

It will be sometime in the fall.

Senator Marshall
[16:01]

Minister, when you appeared before the Finance Committee last week, we discussed the lack of program and financial information, especially as they relate to the COVID-19 programs. At that time, I referred specifically to the bi-weekly reports on COVID-19 spending because the government had been providing them to us up to August 6, but then after that, the reports were no longer tabled and they were no longer presented. When we met last week, you said: “We are seeking to provide financial information,” and that you “accept the core point” that I was making.

My question is this: Will you commit today to reinstating the bi-weekly COVID-19 reports?

Ms. Freeland
[16:02]

What I will commit to, senator, is that in the fall fiscal update, which we are working on right now, there will be detailed information of spending to date and detailed fiscal projections going forward. That’s coming soon.

Senator Marshall
[16:02]

Thank you.

Senator McPhedran
[16:02]

Welcome, Minister Freeland, and welcome to Bill C-9. It’s good to see the government responding to Canada’s business sector. The dedicated efforts of you and your officials are appreciated. I would like to share my time with Senator Galvez.

My question is, again, whether Canada’s big six banks are truly helping financially stressed Canadians through the COVID-19 pandemic and on to a healthy recovery for all. Yes, some of the big six temporarily reduced credit card interest rates, temporarily deferred some payments and lowered some minimum payments on credit cards and lines of credits, as well as some 86,000 deferrals and extensions on business loans valued at over $2.6 billion according to the Canadian Bankers Association. Yet we cannot ignore what we are starting to hear from the financial restructuring sector: An earthquake is coming.

Minister, the Canadian Federation of Independent Businesses has joined the chorus in warning about zombie businesses. As things stand now, all debts will eventually be called in. What are the government’s plans for when COVID-19 is finally behind us but Canadians and Canadian businesses face an avalanche of debt? How can they possibly stay alive? Yes, Canada needs its strong banks, as you reminded me the last time I asked you a question like this, but given the very healthy profits that banks are enjoying throughout this pandemic, is the government working with the big banks to incorporate debt forgiveness as part of the national recovery strategy?

Ms. Freeland
[16:04]

Thank you very much, senator. A lot of questions are embedded in that question, so let me try to take some of them in turn.

The government is working with Canadian banks to deliver many of these programs. One example is the Canadian Emergency Business Account, or CEBA, which is delivered through the banks. We are working now to get that next $20,000, $10,000 of which would be forgivable, out there as quickly as possible to Canadians. Of course, we are working with the banks, and that is really important. It’s a big job. Nearly 785,000 small businesses have received CEBA loans so far. That collaboration is important.

In terms of businesses and the debt that they will have once we are through the coronavirus pandemic, first, one of the reasons that we have created a net of programs to support businesses is that we want as many businesses as possible to come through this crisis viable and solvent. I really believe that the support that the Government of Canada is providing to Canadian businesses is second to none anywhere in the world. We are providing really significant support. As some senators have pointed out, it is expensive, but I think it’s the right thing to do because that will put our economy in a much better position to recover from the crisis once we have a vaccine and we are past the coronavirus.

In terms of whether some type of debt forgiveness provision should be part of the coronavirus recovery effort, I think that is a useful suggestion. We still need to see what the landscape is going to be like when we get there. Let me just emphasize that our focus now, quite rightly, is on helping as many Canadian businesses as possible get through this crisis viable and solvent.

Finally, you’re quite right, senator, that some sectors in the economy are doing well. The coronavirus is having a very uneven impact, and the banking sector is one of the sectors that is doing reasonably well right now.

Senator McPhedran
[16:07]

I pass my time to Senator Galvez.

Senator Galvez
[16:07]

Minister Freeland, thank you for your interest expressed on my white paper and on a clean and just recovery. During our research, we found that many G20 governments have given a lot of importance to conditionality, efficiency and transparency since billions of dollars have been injected into businesses and into society. They see it as investments. We know we need to keep workers and essential and civil services afloat, but as predicted by scientists, we are in the second wave, and other waves will come until vaccines are widely available. Chances are that COVID-19 remains endemic, hence my worries that we need to find a solid equilibrium between the sanitary exigences and opening businesses safely.

Our National Finance Committee report on Bill C-9 recommends that the recipients of the support should not be allowed to give dividends or bonuses, echoing conditions found in the Large Employer Emergency Financing Facility. That also included climate disclosure conditions and excluded corporations convicted of tax evasion. Are you planning to expand such conditions to all corporate financial support programs? If so, when? And if not, what are the arguments?

Ms. Freeland
[16:09]

Thank you very much, senator, for the question. With the wage subsidy and the rent support, our objective has been to create very broad-based programs, which can be delivered to a lot of Canadian businesses in a robust and timely way, that have some built-in flexibility so that as your revenue loss increases, you can get more support. For businesses that are less hard hit, you get less support. We have also built in, with Bill C-9, some additional lockdown support. I also want to emphasize that the rent and wage subsidies are broad-based for the whole country, for businesses across the country — for hundreds of thousands of businesses.

By contrast, the LEEFF program is about a bespoke loan solution where we have tiger teams that work specifically with the businesses to look at their books and provide targeted and tailored loans. That is why, senator, I believe it is entirely appropriate with the LEEFF program, where we are providing significant loans to businesses that apply for them, powerful conditionality kicks into force, both in terms of corporate compensation and environment.

With the wage subsidy and the rent support, we are really looking to have a program that can go out quickly and effectively to hundreds of thousands of businesses across the country and support millions of Canadians. With those programs, the objective needs to be to get out, to do something robust and that can be relatively fast for businesses to get the support to do something simple. As we’ve heard, businesses need the support now.

Senator Galvez
[16:11]

Since COVID-19 will be with us for some time, are you planning to start the economic recovery as soon as the pandemic is over?

Ms. Freeland
[16:11]

That’s a good question. The support we are providing to businesses and Canadians now is meant to support economic recovery.

For workers, the recovery is well under way, since 79% of Canadian workers who lost their jobs at the start of the crisis have already found new jobs. That’s an encouraging number, especially compared to the United States, the economy we are most closely tied to, where only 54% of workers have found new jobs. Our economic recovery is already under way.

However, we also need to remember that we’re still in the middle of a pandemic, that many provinces and municipalities are implementing new lockdowns and that such measures will obviously have an economic impact. I support those measures, but we need to understand that a full recovery can only happen once we have flattened the curve. I think it is possible.

We got some good news about vaccines this week and last. Canada has bought a supply of vaccines, and we will be ready to use it. That’s my answer, senator.

The Chair
[16:13]

We will now move on to the next block of 10 minutes, which will be shared between Senators Smith and Martin.

Senator Smith
[16:13]

Welcome to our hearing, minister.

While you’ve continued to state that historically low debt servicing levels allow you to borrow and spend at these historic levels, repayment of the debt will take place over a longer period of time, perhaps decades.

As per the Bank of Canada, you mentioned earlier that the Government of Canada’s total inflation adjusted outstanding loans and securities currently stand at just under $1.1 trillion. Recent reports showed interest rates on government debt globally spiked on the positive news of new COVID-19 vaccine trial data from Pfizer. For context, the rate on 10-year Government of Canada bonds jumped from 0.64% to 0.75% in one day, adding $1.0 billion in interest costs on total government debt.

Minister, given that Canada has outpaced every G7 nation in spending as a percentage of GDP during this pandemic, has the Department of Finance Canada modelled the impact of rising interest rates on government debt, and is there a debt management strategy in place?

Ms. Freeland
[16:15]

Thank you very much, senator, for the question.

Absolutely, we think a lot about our debt management strategy. Our focus right now is on pushing out the maturities of our debt to take advantage of the very low interest rates that Canada enjoys today. The share of bond issuance that is longer than 10 years is nearly double this year compared to last year; it has gone from 14% to 26%, and that is the highest ever level of long-term issuance in nominal terms.

We do have a carefully thought-through strategy of locking in the low interest rates that Canada enjoys today. That is intentional and absolutely the right approach, I think.

I will say, senator, that I am glad Canada has provided very considerable support to our businesses and Canadians. We’ve been talking a lot about the needs of Canadian businesses, and I believe those needs are acute. I also believe that by acting now to support our businesses, we are going to prevent scarring and some of those bankruptcies that we heard the senator from Manitoba speaking about. The more we can do today to prevent scarring, the stronger, faster and more robust our recovery will be.

I believe this support is money very well spent.

Senator Smith
[16:16]

I just wanted to have a concept from you that would include balance. That was really the purpose of me asking the question; I wanted to see whether there is a balancing act between spending and having debt grow, and then how we are going to manage our debt moving forward.

To move forward, this week you assured the Standing Senate Committee on National Finance that you and the Prime Minister do not have differing opinions when it comes to the state of our country’s finances. You made it clear that COVID-19-related borrowing and spending measures will be temporary in nature and that good governments “will impose limits on themselves.”

Minister, regarding the Fall Economic Statement that your government has promised and that will be made public, will it include some form of fiscal anchor? If not, how will you ensure this spending is temporary?

Ms. Freeland
[16:17]

Thank you very much for the question. The Prime Minister has been clear about that. I have also been clear, as has the Prime Minister, that we understand that the extraordinary spending we are undertaking to fight COVID must be limited and temporary. We will make that further clear in the Fall Economic Statement.

I want to be clear to senators here and to everyone who watches Canadian economic policy closely that our government absolutely understands the very strong reputation Canada has for wise and prudent fiscal management. This is a reputation that has been built up over decades, and that is a representation I understand is very valuable to our country and which I guard very zealously.

Senator Smith
[16:18]

During the pre-study on Bill C-9 in the Standing Senate Committee on National Finance, stakeholders voiced their concerns about the lack of open, transparent and timely COVID-19-related data from governments when it came to public-health lockdown orders. In many cases, small business owners are increasingly feeling that they are being shut out or shut down in order to send a message to the general public, with no data being made available to them. It was clear from testimony that small businesses were looking to the federal government to take on a more proactive role in working with provincial and local governments to fill these critical data gaps.

Minister, will you and your colleagues at the cabinet table — the Minister of Health and the Minister of Science, Innovation and Economic Development, specifically — commit to working with your provincial and local partners to ensure small businesses receive open and transparent COVID-19-related data and work on innovative ways to keep our small businesses open?

Ms. Freeland
[16:19]

Thank you for the question, senator. Both my cabinet colleagues and I work very closely with our provincial counterparts. In fact, I would say one of the hallmarks of Canada’s response to COVID-19 has been the close cooperation of all levels of government. I agree that data on coronavirus is our friend, and the more data we have the better we can respond as a country, as individuals and as businesses.

But let me also say, senator, that I have tremendous respect for public health leaders across the country, and I have tremendous respect for the difficult decisions they are taking across the country, even as we speak, in imposing additional restrictions to fight this deadly second wave of the virus. My job as finance minister is to support them and to support businesses as we do what we need to do to fight the second wave of the virus. That’s one reason this additional lockdown top-up measure is so important. It will cover businesses that are subject to a lockdown restriction for up to 90% of their rent. They need that, and I think public health officials need to know that that support will be there for businesses in their community.

I strongly believe, senator, that the best economic policy is a strong health policy. If we can fight and contain the coronavirus as quickly as possible, then we will all be able to fully reopen our economy. I don’t believe that there is a trade-off between health and economy. I think doing the right thing on health and acting quickly and effectively is the best economic policy.

Senator Smith
[16:21]

If I have a couple of minutes, I would like to ask you about one other concept. We were told, in the Finance Committee meetings, of course, that the restaurant business and the accommodation business — hotels — are really being hammered.

I had a talk with my son who has a couple of restaurants in Toronto, and he said that the issue here is not in restaurants. The virus is not being spread in restaurants; it is being spread in private parties and private gatherings. What is critical is that people recognize that restaurants are not the culprits. Tracking the proper data appears to be fundamental in terms of whether there will be a turn around.

If there is anything you could give us in terms of the commitment that you will make — and this is a leadership opportunity, as I see it, for you as the Minister of Finance. I’m not trying to pin anything on you, but we need to have that strong leadership come from the centre and have it spread. We must make sure that data is properly transferred so we are not putting blame on people who are not guilty. The restaurant and accommodation industries are being hammered, and that’s why they are asking for specific support from you.

Ms. Freeland
[16:23]

I think we should avoid language like “blame,” and “culprits” and “guilty.” I know you didn’t mean to assign blame, but the fact that some economic activities can naturally be done more safely than others is not a question of guilt or blame. It is a question of how the virus is transmitted, and we need to bear that in mind.

When it comes to Toronto specifically, I have tremendous respect for Dr. Eileen de Villa and Mayor John Tory. I’m an MP from that city, and I trust their judgment and decisions very much. Bill C-9 will help businesses do the right thing.

Senator Boehm
[16:24]

Thank you, minister, for joining us, and thank you, Mr. Marsland, for being here as well. I would like to give the balance of my time to my colleague Senator Loffreda.

Minister, as you have been pointing out, many companies have benefited from the Canada Emergency Wage Subsidy, and during your appearance at the National Finance Committee last Thursday, I referred to larger companies — I mentioned the airline companies in particular — that had laid off people, brought them back once the subsidy was in place but then had to lay them off again because of market forces turning the other way, not to their advantage.

At the same time, we are seeing the difficulty of statistical information. Other senators have mentioned the data issue but also the forecasting issue, and we can count on the IMF and the Bank of Canada to a certain degree. I’m sure you’ve seen the article in last week’s The Economist entitled “Northern Light” that points out the difficulties we might have looking ahead in terms of forecasting.

My question, then, was about the success rate of the wage subsidy. I’m wondering how we can also look at which companies are actually succeeding in getting the subsidies, which are not and why, and how you would propose looking ahead to see how companies have benefited and how others may not have. Is there a line we could look at, in reference to Senator Smith’s point about the hospitality industry, for example, and also transport which will take a long time to come back? Thank you.

Ms. Freeland
[16:25]

Very nice to see you, Senator Boehm, and thank you for that really important question.

I think a theme that is running through our discussion today is the variable impact of the coronavirus, whether it is on human beings or on different sectors of the economy. Indeed, in some detailed analysis the Department of Finance has done, what we’ve seen is that this is a multi-speed economy. There are some sectors of the economy that are operating and are even busier — they are doing better than before the virus struck — there are others that were hit and have recovered completely and there are some sectors that are still really struggling.

What we have tried to do with our programs is to create measures that are intrinsically targeted, and the targeting mechanism is the level of revenue loss that your business has had. That is why we’ve set up these formulas that create a slope of support. The hardest-hit businesses get the most support. If you have lost 70% of your revenue or more, you get the full 65% wage subsidy and 65% rent subsidy.

There was some clever mathematical work done by the Department of Finance officials to create a slope that goes down smoothly so that, as the fortunes of your business improve, you get less and less support. That is exactly as it should be, and the intrinsic design of those programs means they reach the people who need it the most. They also avoid creating unintended incentives. You might wonder why it was important for us to get that smooth slope, and the reason was to avoid cliffs: to avoid creating a situation where businesses had a disincentive to do better because then they would get less rent subsidy or less wage subsidy.

The final targeting measure I would like to emphasize is this new lockdown support measure. As we heard from Senator Smith, and as I have heard from so many different businesses, it is agonizing for them. It is agonizing for public health officials, it is agonizing for premiers and it is agonizing for mayors when they see the coronavirus numbers and know they have to impose additional restrictions. This measure, which I hope we will all support, is going to help in that particular situation. With 90% of rent covered, that is meaningful support for those hardest-hit, lockdown-targeted businesses, and I think it will be a good thing to have in place.

Senator Boehm
[16:29]

Thank you.

Senator Loffreda
[16:29]

Minister Freeland, welcome back. So much has been covered. I support Bill C-9, as I mentioned in our Finance Committee, and I appreciate the changes brought forward to the rent subsidy. I know many businesses feel the same way, so thank you.

I want to go back to an area of our economy that is very important, and I touched upon it at the Finance Committee this week, which is technology companies and the way they will be impacted by Bill C-9. More specifically, we have been talking about the digital economy for years, and the pandemic has accelerated the need for businesses to digitize and modernize.

We must support Canadians and our businesses in their transition to this digital economy. As you know, in the digital economy, technology is the primary source of value creation. Technology is so important.

What is the government doing to sustain our high-tech companies, including the research and development companies and artificial intelligence firms that will drive the productivity and growth that we desperately need on the other side of this pandemic? This sector has high-growth potential. It is also an area of interest to my colleague Senator Colin Deacon from Nova Scotia. He has contributed some information in putting this question together. Thank you to Senator Deacon.

For example, are you looking further into opportunities offered by the scientific research and experimental development tax funding, or tweaking the BDC’s Co-Investment programs, which have only approved $148 million of its $300 million allotment so far? Thank you.

Ms. Freeland
[16:31]

Thank you very much, senator, for that thoughtful question and for those suggestions embedded in your question.

Let me first of all say that, in answer to Senator Boehm’s question, I spoke about the very uneven impact of the crisis. Among those sectors that have businesses doing particularly well right now are the digital economy and the technology sectors. There are some businesses in that space that are able to take advantage of the fact that our lives today are lived much more virtually than they were before the coronavirus struck. We are preferring to do our shopping online, for example, to minimize interactions, and so on. There are some businesses in that space for whom this crisis is turning out to be a real economic opportunity. It’s good that Canada has such businesses.

I also agree with your point that supporting Canadian digital businesses and technology businesses is a very important part of the productivity challenge, and will be an essential part of the coronavirus recovery plan. We do need to build back better, and we need to come roaring back. We need to use this crisis as an opportunity to further strengthen Canada’s high-tech, research and AI capacity. So yes, there is definitely more work to do. We’re very excited about it.

Let me just say, it is thanks to that capacity that we have the COVID Alert app, which is a really good one. I have it on my phone; I hope everyone else does too.

Senator Loffreda
[16:33]

Excellent point.

The Chair
[16:33]

One minute.

Senator Loffreda
[16:33]

Thank you for that; the COVID Alert app is wonderful.

Some reassurance is needed. I did mention fiscal anchors before. I understand the fact that you don’t have one. That is fine, I accept that. And you’re not going to have one. But to give some reassurance to Canadians, what tools are you using expenses and expenditures going forward? Just reassure us a little bit on that side.

I know that there is a fiscal snapshot coming in the fall. But from here to the fall it’s so dynamic, and things are changing every day. I would like a little word from you on that.

Ms. Freeland
[16:33]

I will give you one example, senator. When senators and businesses say to me that the new rent support should be retroactive, I would point out that to use our resources as effectively as possible, we want to focus on the future and not the past.

I think all of us understand that the coronavirus has put us in a position of —

The Chair
[16:34]

The next 10 minutes will be equally shared between Senator Wallin and Senator Downe.

Senator Wallin
[16:34]

Minister, I will try and keep my question very focused.

In my province, small business has been extremely hard hit by both first and second waves. By small businesses, for the purposes of this, I’m not talking about small manufacturing firms. I’m talking about mom-and-pop shops, places with one, two or three employees. They are running on empty in rural areas, very dramatically.

I have three points. First, regarding the public health orders, the businesses themselves may not be subject to a direct public health order, but their customers are, so it seems an unnecessary constraint or hurdle.

Second, why not just offer financial aid to these businesses to be used in ways they see fit, rather than these piecemeal approaches, some of which they can’t access if they are a mom-and-pop shop?

Third, are any changes proposed to bankruptcy laws that might help those who can start again, if they can, to have a little more leeway? Thank you.

Ms. Freeland
[16:35]

Thank you for those excellent questions. Let me just thank the Saskatchewan Minister of Finance, conversations with whom were very helpful, in particular with the rent support.

First, to get the lockdown top-up, why do you need to be subject to a particular lockdown order? This makes the program really generous, right? And 90% of rent covered is a lot, so we needed criteria that focused on the businesses that were directly affected by a lockdown order. Also, this measure was created to help public health officers do the right thing, and to help public health officers, mayors and premiers know that if they put in place new lockdown restrictions because of the virus, the support will be there. That’s the rationale behind it.

Second, why the specific approach, with some support for rent, some support for wages? I think this gets back to the conversation we were having in this wing of the Senate around the balance we are striking in delivering support to businesses. There needs to be some eligibility criteria. We need to know why businesses need the money and what they are going to use the money for. I think supporting the wages of employees and supporting fixed costs, of which rent is the largest one for most businesses, are really good criteria to base the support on.

On bankruptcy, it is a really good question. It’s something that we are monitoring closely. If we get these programs right, we will minimize the bankruptcies that we face in Canada, but it’s something we need to look at.

The Chair
[16:37]

Senator Downe, do you have a question?

Senator Downe
[16:37]

Deputy Prime Minister, as I mentioned earlier when your microphone was not working, P.E.I. has a very low level of COVID and transmission. We are very thankful for that. The residents of P.E.I. are also very thankful for all the assistance the federal Liberal government has given. I hear it constantly when I’m out in the community. It has made a tremendous impact. Obviously, we have sectors impacted that this bill will help address and keep that progress going forward.

However, one area that would complement this bill is a change in the national policy. Currently, the Government of Canada has most of their federal employees working from home. In Prince Edward Island, the provincial government has managed to bring a number of employees back to the government offices. This would greatly assist the businesses in downtown Charlottetown and Summerside. We have, as you know, the Department of Veterans Affairs and others. The businesses are really impacted by their absence. They are continuing, obviously, as I emphasized, to work from home. However, a number of those people working in their offices across Prince Edward Island would greatly assist our businesses. Maybe as Deputy Prime Minister that is something you could look at. Thank you.

Ms. Freeland
[16:39]

Excellent point; congratulations P.E.I. and Atlantic Canada for doing such a great job. You are the New Zealand of North America, and we can all learn a lot from you guys. I promise to raise your point with Minister MacAulay, another proud Prince Edward Islander.

The Chair
[16:39]

The next five minutes are for Senator Bovey.

Senator Bovey
[16:39]

Welcome back, and it’s lovely to have you here again.

I have another question regarding eligibility requirements for the Canada Emergency Rent Subsidy. In the backgrounder that accompanied this legislation, one of the eligible entities mentioned is art schools. That’s obviously a broad term covering many aspects of the teaching and training of all the arts: music, visual art and theatre.

Could you please define what the government has in mind and what your definition of “art school” is? Then I have a quick follow-up.

Ms. Freeland
[16:40]

Thank you for that question and for your attention to detail.

As I said in my opening remarks, when we think about this support, we’re mostly thinking about businesses, but we have been clear that we want not-for-profits and charities to be covered as well.

In terms of the specific definition of “art school,” I saw Andrew shuffling his papers, and maybe he will be happy to go into more detail there.

Andrew Marsland, Senior Assistant Deputy Minister, Tax Policy Branch, Finance Canada
[16:40]

Thank you, minister.

As a point of clarity, the criterion is a registered charity or non-profit organization. So if an art school was either of those, it would qualify. There is no definition. I think it was given as an example to explain, as opposed to a definitional issue.

Senator Bovey
[16:41]

That is very helpful. I think I have a minute. Let me ask one quick question about individual artists who are self-employed businesses and their studio rents. Do they get assistance under this rent subsidy?

Ms. Freeland
[16:41]

I will start and then I’ll let Andrew continue. It would depend on how they are registered as a business.

Andrew, would you like to go into more detail?

Mr. Marsland
[16:41]

I think you would have to look at the particular circumstances. Generally speaking, if it has a payroll account — which it probably wouldn’t have in the example you gave — or a business number with the CRA, then it would be potentially eligible.

The Chair
[16:42]

You still have two minutes, Senator Bovey.

Senator Bovey
[16:42]

Then I’ll ask a business question dealing with the arts. As we know, many commercial art galleries across the country have been forced to close down because of COVID. One of the big issues is that artists have lost opportunities to sell works. I presume that, as they are registered businesses, commercial galleries can seek rent assistance.

Ms. Freeland
[16:42]

Absolutely.

Senator Bovey
[16:42]

I’m honoured to take all this back to my constituents from coast to coast to coast. Thank you very much. I have asked my questions.

Senator Bellemare
[16:42]

Minister, thank you for being with us today. I have a sub-question, and then I will yield the balance of my time to Senator Jaffer.

We know that the economic recovery will take a long time and that Canada will need to make structural changes to its economy. We also know that investing in skills training is indispensable to a sustainable recovery.

The Advisory Council on Economic Growth, which was established by your predecessor, evaluated the annual need for skills training. The council found that annual investment in skills training for employees needs to be increased by $15 billion.

Mr. Trudeau announced that he would allocate $1.5 billion for skills development funding, but this funding is mainly for the vulnerable and the unemployed. Minister, why not use the wage subsidy program and Bill C-9 as an opportunity to provide further tax incentives for businesses? They could invest in training for their employees, who are currently underemployed and desperately need to upgrade their essential skills, including computer skills, to be more prepared for the future.

Ms. Freeland
[16:44]

Thank you for your question, senator.

I agree with regard to the training, but I disagree with you regarding Bill C-9.

I absolutely agree that, generally speaking, Canada needs to invest more in training, particularly now. We have started to regain the jobs that were lost during the worst days of the crisis, but we still have a lot of work to do. Obviously, we need to invest in training. That will help us build a better post-crisis economy. I completely agree with you on that. Now is the time to do it.

However, I don’t agree that Bill C-9 is the right tool for accomplishing this. I want to stress that our businesses need help immediately. That’s why we tried to create very simple, very targeted programs without adding too many things.

This isn’t a Christmas tree. It’s a very targeted program that was created to help our businesses today, while we are in the midst of the pandemic. That being said, in general, I strongly support the idea of investing more in training.

Senator Bellemare
[16:46]

I conducted a survey with Nanos, and the results were published in January 2020. The number of Canadians in the labour force was estimated to be 11.4 million. Some are working and some are unemployed, but these 11.4 million Canadians are considered to be our active labour force. They would like to take training to improve their computer skills and essential skills.

We are giving businesses a lot of money. You’re planning to pay them $68 billion by December. There is often a correlation between the cost of training and a lack of income. Wouldn’t it be worthwhile for your department to work with the Department of Employment to find a way to get the best value for that money? Thank you.

Ms. Freeland
[16:47]

Thank you once again. I’ll add that I work closely with my colleague, the Minister of Employment. I completely agree that training is very important and that we need to invest in this sector. As for Bill C-9, I firmly believe that right now, since we’re in the middle of a pandemic, we need to implement very simple, very targeted programs. This program is intended to help our businesses survive this crisis.

Senator Bellemare
[16:48]

Thank you very much, Minister. I’m done. I yield the balance of my time to Senator Jaffer.

Senator Jaffer
[16:48]

Thank you, senator, and thank you, minister. It’s a real honour to speak to you, to a woman finance minister.

Minister, I want to thank you for all the steps you have taken at different times to meet the needs of Canadians. There is no doubt that Canadians are facing tremendous challenges. As was referred to by Senator Bernard — and I am continuing with what she was saying — the challenges faced by racial communities are even harsher. In the summer, the parliamentary caucus asked that every legislation have a race-based analysis. I was wondering if you have carried out a race-based analysis on this legislation.

Ms. Freeland
[16:49]

Senator, thank you for the question. I very much agree with the core of your analysis, that the impact of the crisis has been uneven and that racialized Canadians have been particularly hard hit. We are very aware of that in our policies and we really believe that our policies have to meet people where they are, and have to respond to the terrible reality of the coronavirus crisis.

I do think that our government needs to do more work on collecting disaggregated data and being sure we have the information about who is being reached by programs and who needs the support. I would agree there is still work to be done there.

Senator Jaffer
[16:50]

Thank you, minister, for your response. What I wanted to know is: Did you carry out a race-based analysis for this bill?

Ms. Freeland
[16:50]

Senator, I would say we are very aware and looking very hard at the particular impact of the coronavirus and of what we might call the coronavirus recession on racialized Canadians. We are developing particular programs to provide additional support there. But I do believe, senator, that our government needs to do much more in terms of the collection of data that would allow us to do the kind of analysis that I think we need to do.

Senator Jaffer
[16:51]

Minister, I would be the first person to agree that your government is doing a lot of work for racialized communities. From your answers, I am assuming you have not done a race-based analysis on this legislation specifically. In the future, I would respectfully ask that, for all legislation, and especially for any bill that you are working on, you kindly carry out a race-based analysis. Thank you.

Ms. Freeland
[16:51]

All I can say is thank you very much for the question and for highlighting the importance of disaggregated data that helps us to do the kind of analysis that I agree with you is really important. It is important in general, but we already know from the data we have on the coronavirus that it is simply a reality that it is hitting racialized Canadians harder. So our programs need to reflect that.

Senator Batters
[16:52]

Minister Freeland, in August, Prime Minister Trudeau prorogued Parliament stating, as a major rationale, that the government needed the time to develop a small business assistance program.

In October, you implored MPs not to defeat your government on a confidence motion because these small business measures need to pass, but you didn’t introduce Bill C-9 until weeks later in early November. Now, despite all that delay, there is a major flaw in your rent subsidy again.

Last week and again today, you said you’re going to bring in yet another bill to fix this flawed government bill. Bill C-9 is still before the Senate, and our job is to fix flawed bills. Small business owners need help now.

So, following up on Senator Carignan’s line of questioning, why is the Trudeau government wasting time bringing in a whole new bill that will have to pass both the House and the Senate when you could introduce a government amendment to fix the flaw in Bill C-9 during Senate deliberations?

Ms. Freeland
[16:53]

Senator, each one of us will have to answer this question for themselves. My answer is that I talk to a lot of small businesses every day. I think everyone here does. I know they need the support urgently. I think the coronavirus and the second wave is hitting our country harder than many people expected, and in parts of the country where it had not hit so hard. My objective is to get the support to Canadians as quickly as possible.

As I have said to senators, thanks to the very hard work of our officials, I am able to assure you that the moment that this legislation, in its current form, is passed and enters into force, businesses will be able to benefit from it fully, including using rent payable for eligibility.

I think the right thing to do for Canadian businesses is to pass the legislation as quickly as we can. Obviously, senators will have to make their own decisions about that. I know I would struggle to explain to a business why they needed to wait longer.

Senator Batters
[16:54]

Minister, I am simply trying to give you a solution that would save time and get Canadian small businesses help as soon as possible: amend this bill instead of asking us to pass this flawed bill and then asking us to pass an entirely new bill.

Minister, I’ll go on to a different line of questioning. The husband of the Prime Minister’s chief of staff, Rob Silver, is a senior vice-president with MCAP. This is the company that was awarded the multi-million dollar contract to administer the Trudeau government’s first rent subsidy program that CFIB head Dan Kelly called a “disaster” at the Senate Finance Committee last week.

Tell us the dollar amount, please. How much money did Rob Silver’s company receive to run the Trudeau government’s first rent subsidy program?

Ms. Freeland
[16:55]

As you know, senator, what we are debating is a new rent subsidy program that will provide the support directly to businesses through the CRA. That’s something that businesses have asked for, and I think that this is the right approach to be taking. I am very pleased to be putting this particular piece of legislation forward.

Senator Batters
[16:56]

Minister, I think what we would also like to know, and what taxpayers would like to know, is how much money that particular company received to run the first Trudeau government rent subsidy program, which, again, CFIB head Dan Kelly called a “disaster.” That is a legitimate question for taxpayers to know the answer to when we debate the second and soon-to-be amended next rent subsidy program.

Ms. Freeland
[16:56]

Senator, I am very glad that we have found a way to deliver rent support for businesses directly to the tenants. I think this will simplify things considerably and make it possible for us to support more businesses. I am also pleased that we have found a way for the very hard-working people at CRA to deliver that support. We have seen with CERB and the wage subsidy that they are able to do it. They are the right people to do this job.

Senator Patterson
[16:57]

Thank you, minister, for being with us here today.

In October, I conducted a survey of businesses in Nunavut about how they were doing during the pandemic, which, as you know, is sadly now hitting Nunavut in an alarming way just recently. Of the 162 respondents, only one received the commercial rental assistance, while two more applied and were denied. This isn’t the type of support Nunavummiut indicated they needed. The most-accessed supports were those centred on wage subsidies, but even these were not enough, and 88% of respondents are still worried about the survival of their businesses in this very high-cost environment.

The chief economist for the Canadian Chamber of Commerce has said that the one-size-fits-all approach to support programs is not sustainable through 2022, and it may not be particularly useful at this stage of the pandemic.

My survey confirmed that help is needed for some especially hard-hit sectors, such as the hospitality industry and hotels, which are essential services in our remote communities, and tourism and the arts and entertainment sectors. Could you comment on what measures are being taken by your government to address the specific needs of these industries?

Ms. Freeland
[16:58]

Thank you very much, senator, for the question. I think all of us are very aware of the new challenges that Nunavut is facing. I would like to take this opportunity to say to the people of Nunavut and to the leadership of Nunavut what a terrific job they have done so far in fighting the coronavirus and to support them as they meet this current challenge. I’m glad that you started by mentioning that.

There are lots of points embedded in there. On the rent support, as we have been discussing, this is a new program that does not require landlord participation. It will go directly to tenants. I very much hope that there will be more businesses in Nunavut that are able to benefit from it.

Given the new lockdown measures that have been put in place, I think there will be additional support available now for Nunavut businesses. For the affected businesses, up to 90% of the rent will be covered. That’s precisely why this legislation is so important and so urgent. Those businesses need it now and I really hope we will be able to get it to them soon.

Now, senator, on the question of broad-based programs and additional support, let me point out that these programs — the wage subsidy and rent support — do actually provide targeted support. You get more support the greater your loss. So if you have a 70% revenue loss or more, you get 65% of your rent or wages covered, up to 90% if there is a lockdown order. That is a really important and effective form of targeting.

The RDAs have also been very active and have supported more than 34,000 businesses across the country, if there are some really specific instances of a business that needs support but falls through the cracks.

Senator Patterson
[17:01]

I have a very quick question, if I may, Madam Chair, and thank you for that answer. I understand that there will be future legislation to fix certain oversights regarding the commercial rent program. I’m wondering if that legislation would consider supporting what I’ve seen as a problem from the beginning, and that is non-revenue-generating companies such as the junior mineral exploration and some construction sectors, whose business model is not a revenue-generating model?

Ms. Freeland
[17:01]

Thank you for raising that point, senator, and I am aware of how important that sector is in the North. We can certainly look into what measures might be appropriate for that sector.

I think when it comes to Bill C-9, my goal is to be very targeted and focused, and what I have committed to you and what I have committed to the CRA is that we will introduce a targeted and focused amendment specifically on the rent payable. I think we have to be very strict and disciplined with ourselves to be sure that this really important program gets out there.

The Chair
[17:02]

We’ll move on to Senator Forest for the next block of 10 minutes.

Senator Forest
[17:02]

Thank you very much for being with us. You gave an excellent speech about the wage subsidy program. This is a targeted and very specific program, which means that the more a business has lost, the more assistance it will receive. I asked you a question about this when you appeared before the Standing Senate Committee on National Finance. In my opinion, it is downright immoral for a company to receive more than $63 million in wage subsidies and then to pay out $46 million in dividends. Some businesses are just trying to survive, so a program should not allow companies that receive an exceptional level of assistance to also pay such big dividends to their shareholders. In the targeted amendments that you plan to make to fine-tune the bill, would it be possible to look at prohibiting companies that receive the Canada Emergency Wage Subsidy from paying dividends to their shareholders and also prohibiting them from paying massive bonuses to their senior executives? This public money is meant to maintain jobs and help businesses that employ ordinary working people survive. It is not meant to go to shareholders or senior executives.

Ms. Freeland
[17:04]

Thank you for the question. I would like to begin by saying that we want to help as many businesses in Canada as we can with the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy. In order to do that, we need to have a very targeted, very simple program with few conditions. The more conditions there are, the harder it will be to deliver that assistance quickly and efficiently. I understand that many senators have good ideas about how we could use these programs to do a lot of things, such as provide training and meet other objectives, but I think that if we want the program to really help businesses, then it is important to keep it very simple.

However, I can assure you that when we give a higher level of targeted assistance to a company, through the LEEFF program, for instance, we apply the conditions that you suggested, and we also check what these companies are doing to address climate change. I think that when we create targeted assistance programs like these, it is absolutely essential that those conditions be met.

Senator Forest
[17:06]

Minister, we need to reach as many people as possible, but I wasn’t talking about doing other activities. I think it’s downright immoral for a corporate citizen to even consider paying out dividends under such circumstances. The government just needs to make sure that it’s getting public money out the door as efficiently as possible and that the measures we implement reach those who really need them, so that Canada’s economy can come out of this historic crisis in the best possible shape.

The Chair
[17:07]

Senator Forest, you’re sharing your time with Senator Simons, right?

Senator Forest
[17:07]

Yes.

Senator Simons
[17:07]

My question relates to the way we are going to let people know these benefits are available to them. I have been quite distressed at the lack of knowledge about the Canada Recovery Sickness Benefit and the Canada Recovery Caregiving Benefit, which people in my province don’t seem to have heard enough about. I’m wondering if there are plans in place to make sure that these new benefits are made widely known to people who might be able to benefit from them?

Ms. Freeland
[17:07]

That’s a really good question, senator, and the information you’ve shared is troubling to me too, because I would hope that people across the country are aware that these personal benefits — direct to Canadians — exist and they are able to apply for them, so thank you for letting me know that knowledge is not widely out there.

In terms of these new programs, look, I can assure senators that I will be out there talking about them a lot. I really believe that they are absolutely essential as our country fights this intense second wave. I hope you will all help me in being sure that businesses are aware that this support is there.

I think the senator raises a really important point, because letting Canadians know that these measures are out there — and I would say specifically since we are talking about the business support measures today — I think that can build confidence in the economy. I am really hopeful that this will give businesses the confidence to do the difficult things they will have to do to get through the winter. As we all know, animal spirits matter in an economy and confidence matters in an economy, so it will be important for us to be sure that people know that this support is there for them.

Senator Simons
[17:09]

Thank you very much.

The Chair
[17:10]

Honourable senators, the committee has been sitting for 125 minutes. In conformity with the order of the Senate of earlier this day, I am obliged to interrupt proceedings so that the committee can report to the Senate.

Minister, on behalf of all senators, thank you for joining us today to assist us with our work on the bill. I would also like to thank your official.

Hon. Senators: Hear, hear!

The Chair: Honourable senators, is it agreed that the Committee rise and that I report to the Senate that the witnesses have been heard?

Hon. Senators: Agreed.

The Hon. the Speaker
[17:12]

Honourable senators, the sitting of the Senate is resumed.