Honourable senators, the Senate is resolved into a Committee of the Whole on the subject matter of Bill C-14, A second Act respecting certain measures in response to COVID-19.

Honourable senators, in a Committee of the Whole senators shall address the chair but need not stand. As ordered earlier today, the speaking time is five minutes — including questions and answers. As also ordered by the Senate, the committee will receive the Minister of Finance, and I would invite him to enter, accompanied by his official.

(Pursuant to the Order of the Senate, the Honourable Bill Morneau and his official were escorted to seats in the Senate chamber.)

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

Thank you very much. Let me start by introducing Andrew Marsland. Andrew is the senior assistant deputy minister of taxation and someone with a deep and broad understanding of taxation. He is here to answer any more detailed questions that you might have of him today.

I want to say I’m pleased to be here today, and while it would be under duress if you decide to end this shorter, I would be willing to acquiesce, so I will leave you to take that under consideration if you get bored with me at any time during this afternoon’s proceedings.

I would like to start by providing some context for why we’re here today. We obviously all know that the challenge that Canadians are facing and that we’re facing as people who are representing Canadians is enormous, and we know that people across the country are feeling anxious first and foremost about their health and then, of course, about their economic security. That is the way that our government has approached this challenge, first and foremost in thinking about ensuring that our health care system is up to the task of dealing with the COVID-19 crisis and then looking very carefully at how we can support Canadians through a particularly difficult time.

You will know that when I was last here, we were talking about our first set of measures, the Canada Emergency Response Benefit, trying to make sure we had a support mechanism for all Canadians who are not able to be working during this time. In particular, we were talking about the 5.7 million out of 19 million working Canadians who were not attached to an employer, so that was particularly important for us to get at immediately.

Today we’re talking about a second measure that we think will be very important, not only in providing support for Canadians but also in ensuring that, as we move out of this crisis, people will remain attached to their employer.

What we’re talking about is the Canada emergency wage subsidy, and the intent there is to enable employers to deliver up to 75% of an employee’s pre-crisis earnings up to a maximum of $847 to the employee and, in that way, ensure they are able to support themselves and their families, of course, and remain attached to the firm.

You will know that these two measures together are the most significant investments that Canada has made since World War II. They are, respectively, $24 billion in estimated costs and $73 billion in estimated costs for a direct impact on Canadians going directly to people, of, as you can add up, about $97 billion.

Those supplement other measures we’ve taken in support of businesses, such as another wage subsidy of 10% for small businesses across all lines of business, not just ones that are impacted by COVID-19, and additional measures that we know will support particularly vulnerable or impacted groups.

I’m very pleased to be here with you today. I know we need to look at next steps. I can assure you that we have more ideas about how to make life easier for Canadians during this very difficult time. This is a highly dynamic crisis, and the measures we propose need to be equally dynamic. We’re going to keep looking at what we can do to tackle this problem and, with your advice, I hope we’ll have some more ideas on next steps we can take.

Thank you very much. I look forward to your questions.

Minister, when you were here on March 25, you dismissed my question out of hand asserting that your 10% wage subsidy was too low. You said I was incorrect. Forty-eight hours later, your government reversed itself and announced a 75% wage subsidy, but details weren’t provided until five days after that. Now we have Bill C-14 before us, two and a half weeks after your first attempt to offer a wage subsidy. Canadians will still have to wait another three to six weeks to receive their money.

Minister, it is great that corporations like Air Canada will hire back employees with this wage subsidy, but they have deep pockets to withstand the wait. With rent payments due for the month of May in short order, how do you think small businesses will survive while they wait to receive this wage subsidy?

Thank you, senator. There are a number of things that you said in that statement. Perhaps I can unpack it one by one.

First, when I was last here, I was talking about the importance for us to have a made-in-Canada approach. If I’m correct, your question was about the approach of another country. In our situation, we saw it as critically important that we start with the idea that many of our employees, as I mentioned in my opening remarks — 5.7 million out of 19 million — would not be impacted positively by a wage subsidy because they are not actually attached to an employer. In that regard, we decided that the first and most important thing we could do was to have an approach that would, on an emergency basis, support them.

Second, the 10% wage subsidy we put in place originally was different than what we’re talking about today. That subsidy was for all small businesses without an impact on their business and necessarily in a direct way.

You’re not answering my question.

So for any business of up to 18 employees, they have that 10% wage subsidy.

What we’re talking about today is a 75% wage subsidy for employers who have a decline in revenues of 30% or more. You used the example of Air Canada. I could use many other examples of businesses in Canada that are significantly impacted by COVID-19. In fact, it is presenting enormous challenges for all of those businesses, large and small, because of the declines in revenue. We think it is critically important for them to retain their employee group.

With respect to the small businesses, you will know that we have introduced some other measures. We put in place, for the smallest of businesses, the Canada Emergency Business Account, which will allow them to have $40,000 in interest-free debt between now and December 31, 2022. If they’re able to pay that off by that time, $10,000 of it — or up to 25% — will be forgivable. This enables them to bridge a particularly difficult time.

There will be other things that we will need to consider. We think this will help many businesses, along with the ability to pay their employees. For those businesses that have taxes owing, whether it is GST or income taxes, we’ve deferred those as well, creating a source of liquidity for them.

Finally, we will put in place measures to ensure that people have access to credit across all sizes of business. We know that will also enable them to bridge this difficult time.

If you have any specific ideas, we are happy to consider them as something that we can look at in the future.

I had a specific idea a few weeks ago.

Minister, Alberta, Saskatchewan and Newfoundland and Labrador are still waiting for help from your government as they deal with COVID-19 and a collapse in oil prices.

When you were here on March 25, you said that these provinces would receive help from your government in “hours, potentially days.” Why is there a delay? Where is the aid package you promised these provinces two and a half weeks ago?

Suncor’s cost of borrowing went up considerably earlier this week. You said in March you were looking at ways to backstop lenders to our energy companies. What will you do on that front?

In fact, senator, there has been no delay. There have been a number of things we have done that will positively impact firms in the energy sector, as well as firms more broadly. We have done this step by step.

First, with respect to the many small businesses in the energy sector, the Canada Emergency Business Account will provide them with access to capital. That’s quite important. As you know, there are many small businesses in Alberta, Saskatchewan and Newfoundland and Labrador.

Second is the wage subsidy. Most of those businesses have been seriously hit, from a revenue standpoint, because of the three impacts —

I’m sorry, minister, but we have to move to another question.

My question is about seasonal workers and the cultural sector. For those categories of workers, there is a delay between revenues and the target period. For instance, a company that is currently growing greenhouse produce won’t generate revenues until the summer. That means the drop in revenues will happen outside the eligibility period.

I’ve also been talking to people in print media. That industry hasn’t yet started to see a decline in ad revenue, because governments are buying a lot of ads right now. However, once the crisis is over and the government stops spending so much money on ads, the media will experience a decline, because the big companies that buy ads, like auto dealers, real estate and all things culture-related, won’t be buying ads this summer. The drop in revenue could come later.

What are you planning to offer those companies in terms of financial compensation or the possibility of making them eligible for the credit?

That’s a good question. I know that many sectors are in a very difficult position right now. Obviously, businesses in the tourism and hospitality industries are in a very precarious situation.

We began by taking measures that will help businesses meet the major challenges they are facing today. We are talking about businesses whose revenue has dropped by 30% compared to last year or even compared to January and February. These challenges and other problems will continue. The situation is constantly evolving and we will make adjustments to find ways to help sectors in difficulty. Of course, access to credit is very important. That is why we are looking at ways of giving every sector access to credit. We will have more to say on that in the coming days.

Obviously, new challenges will arise, and we will have to look into them as we get more information.

How do you intend to help businesses? In some business models, a business may comprise a management company and an operating company. The operating company earns revenue and some of the expenditures are transferred to the management company. The non-arm’s-length revenue is transferred to the management company. Revenue must be taken into account in this business model. How do you intend to offer financial compensation to these management companies that do not deal at arm’s length with an operating company, for example?

A number of companies have told us they are structured that way. While the group may be in good shape overall, one of the subsidiaries might be in a more precarious position. As we see it, the group should be treated as a single entity because it can help its subsidiaries. If another solution presents itself, we’ll look at it. For now, we think a group should be treated as a single entity with respect to revenue. As such, this is for enterprises that have lost all their revenue because of COVID-19.

I am talking about all management companies, not necessarily a group with several subsidiaries. Maybe your deputy minister can answer my next question.

On page 8 of the bill, in subclause 4, which is entitled “Computation of revenue”, at paragraph (d), subparagraph (ii), there is a formula: $100(A/B)(C/D). There seems to be an error in the formula because the descriptions of A and B that follow mean exactly the same thing. I don’t see the point of repeating the same thing twice.

Could you or your deputy minister clarify the difference between A and B in the formula at lines 27 to 37 on page 8 of the bill?

I’m sorry, but the five minutes have expired. I invite you to provide a written response to the senator.

Minister, my colleague Senator Renée Dupuis, an independent senator from the Laurentian region, and I would like to thank you and your colleagues for your work during this difficult time.

This legislation underscores the vital importance of a sufficient source of income to provide every Canadian with the stability and ability to follow and maintain their individual as well as our collective good health. It also aims to assist economic recovery post-COVID-19. While the emergency GST tax credit measures are a good start, they are not sufficient, and many of those most marginalized require special outreach and assistance to register for such measures.

What provisions are being made to ensure economic stability for all during this pandemic and beyond, including for those most socially and economically marginalized, particularly those who are vulnerable, poor, homeless, Indigenous, black and other racialized communities, and those who are not receiving enough to get by or have not been able to register for current emergency assistance?

Furthermore, does the federal government plan to use existing tools within our tax system to provide guaranteed minimum income measures to ensure that everyone, including the most vulnerable people of our society, can maintain a dignified standard of living?

Thank you for the question. What we have attempted to do during this time of crisis is to deal with the challenges we’re faced with in this crisis. So we’re looking specifically at the people who have been impacted by COVID-19 and trying to ensure we support them during this time. This has driven how we’ve designed the measures we’ve put in place.

The idea behind the Canada Emergency Response Benefit was, for those many people who would fall out of the workforce quite quickly, to ensure they had enough money to continue to support themselves in terms of groceries and rent. The amount of $500 per week for 16 weeks, when we looked at it together with the GST low-income tax credit that we put in place and the one-time increase in the Canada Child Benefit, provides significant support for people at the low and approaching middle end of the income spectrum.

The wage subsidy is intended to help those who are attached to an employer, as I said earlier. It is intended for people in a slightly higher income bracket, but it caps off at $58,700 in terms of the annualized earnings that are used as the 100% level.

We are doing our best to find a way to ensure that people can bridge the gap at this time. That is not to say that there aren’t vulnerable Canadians who will remain challenged throughout this time and beyond. We also recognize that some of those vulnerable Canadians are particularly impacted by COVID-19, which is why we’ve allocated specific funding for Indigenous, First Nations, Métis Nation and Inuit peoples.

We’ve taken the approach where we’re looking at the specific issues people are facing and looking at particular groups. We have funding going to places that we know will need to provide services; for example, food banks and shelters, where we know people will be particularly challenged during this time. We’re trying to target our measures to places where we think they can have the biggest impact, recognizing that we are bridging a time period so that people can get back to a more normal economy, we hope, in the not-too-distant future.

Thank you very much, minister. As you have already acknowledged, and as my colleagues have mentioned, we have deficits. A patchwork of approaches is being taken that still leaves people behind. What are the plans to ensure those individuals will actually be assisted in both the short and long term?

There are specific groups of people for whom we need to ensure they are finding support during this time. I won’t give you a long list, but here are some examples: We have about 2.1 million students in this country. Of those 2.1 million students, last summer 1.6 million of them sought employment and 1.4 million of them obtained employment. It’s fair to assume that many of them will not be able to obtain employment this summer. This is an issue we’re looking at carefully in terms of how we can provide support. There are other places as well, which I would be happy to speak about later.

Thank you, minister, for being here with us to answer our questions. As we all know, the pandemic we’re dealing with has truly highlighted the tremendous work being done by our health care professionals. We thank them from the bottom of our hearts. It has also made us realize the vital work done by workers who are often undervalued. Of course I’m talking about grocery store clerks, sanitation workers, delivery workers and many others who put their health on the line every day to allow us to continue to function. As we all know, these people don’t earn a living wage. They don’t have access to benefits and often work part time in unstable, changing conditions.

What is the government’s plan to ensure that these individuals receive not only a proper salary, but also work protections such as sick leave during the pandemic and thereafter?

This is another issue like the one I explained in my remarks about the students. We are, of course, looking at how to ensure that workers have the necessary protections so they can work in an environment that is safe for their health. We also want to ensure that they are earning enough to continue to work. We are working with the provinces. That is very important.

I’m sure you know that Quebec has already implemented measures to support essential workers and increase their hourly wages. We are looking at ways to work with the other provinces to get similar programs implemented for essential workers. Workers’ health is, of course, very important, which is why we must work with the provinces, while respecting their jurisdictions in our health care system.

I share a concern of Senator Simon of Alberta. The 75% wage subsidy program doesn’t apply to public organizations such as municipalities, libraries, universities and art schools. Many of those entities were forced to proceed with mass layoffs and, in light of all of that, we would like to know what federal support might be given in the near future to municipalities and the post-secondary sector.

We decided to focus those measures on enterprises, including both corporations as well as not-for-profit enterprises, whose revenues have dropped. This means that municipalities and other government institutions are in a different situation, and we think it’s important to take the affected sectors into account immediately.

I have no doubt that we will work with the provinces going forward to see how we can also help other kinds of institutions. However, the vast majority of the institutions you’re talking about, as well as government institutions, actually come under provincial jurisdiction.

I have two questions. The first one is for Senator Griffin of Prince Edward Island. She advises that the premier of Prince Edward Island has stated that the Prime Minister has told the premier that those whose EI benefits will run out and who have no seasonal job — in fishery, tourism, possibly even agriculture — would be able to continue with benefits through the Canada Emergency Response Benefit program. Can you confirm that today?

I can confirm this is something we are looking at. We do recognize there are workers who are in difficult positions because they are in seasonal industries and that we do need to find a way to give more assurance to those people that they will be supported during this time, but I don’t have an answer on exactly how we’ll do that at this time.

For Senator Black, Alberta: Minister, it has been two weeks or more since the promise of relief for the Canadian energy sector. When can the hard-working men and women expect an industry-specific relief measure? What can we expect and, more importantly, when?

There are a number of measures on which we have already moved forward that are providing important support for the energy sectors. Clearly, the wage subsidy we are talking about today is going to be a huge support. As you know, many of the organizations in that sector, even when the revenue goes down, need to continue to employ their people because their assets will actually not be effective in the long term if they don’t do that. That means they are continuing to pay their employees and that, of course, means the wage subsidy will have a big impact on them.

Additionally, we are looking at measures of credit support for businesses across sectors, but importantly in the energy sector where we know people have been particularly impacted. We are nearing completion of those discussions with the banking sector on how we can guarantee those funds appropriately. I expect we will be able to talk more about that in the relatively near future.

Thank you, minister.

Minister, thank you for what you are doing, but I’m not sure the banks got the full message. Big banks are charging interest on interest for deferred mortgage payments, deferments up to six months. On average, for some families, this would be another $7,400 to pay in interest on interest. There are 600,000 Canadians who have applied for this. It sounds like a cash grab, in a way. Surely you can’t be happy with this?

Thank you for the question. Our approach has been to try and engage all Canadians — that includes the banking sector and other sectors — in our efforts to get through this challenge. I’ve been working with the banking sector, in particular, because the idea of flowing credit is so critically important. We have released enormous sources of liquidity into the market. Our challenge is to make sure that liquidity is actually out there and working for Canadian businesses. That is quite important.

We have also pushed the banks to be involved in delivering the Canada Emergency Business Account for small businesses, an enormous undertaking for more than a million small businesses, which has now started. Finally, as you would have seen last week, after some fairly extensive discussions, we worked with the banks to get them to reduce their credit card fees in most cases by about half for Canadians who are facing challenges.

There is certainly more work to be done. I expect the banks will continue to be an important part of dealing with this challenge, and I am committed to continuing to work with them in that regard.

I hope the banks pay a little more attention to these kinds of interest rates, minister. It seems greedy, as one person said.

Briefly, a plumber in Edmonton, Alberta, says his company won’t pay him the extra 25%. The Huffington Post is reporting that the company will get the 75% wage subsidy but now the company will not give him the other 25%. You said on Thursday that you encourage employers to do all they can to top up their employees’ pay to 100%. Can you have stronger words than that, something other than the word “encourage”? I know you want to tell the companies to pay the 100% but some companies are not.

No, we won’t have stronger words than that. We won’t because we think it’s the wrong thing to do. We are saying that the subsidy is for companies that have a 30% or more decline in revenue. Many of them have zero revenue. For a company with zero revenue, we are asking them to keep their employees on and we are paying up to 75%. If we force them to pay the other 25%, then they won’t take the subsidy. It’s the law of unintended consequences, if we take your approach, sir. We have decided that we will go forward with the 75% wage subsidy. That will protect an enormous number of Canadians. For those businesses that can afford to continue paying people, we expect and we know that many of those businesses are willing to pay people up to the 100%, including their benefits. But for those businesses with no revenue, that would be an unrealistic expectation, except in the most benevolent of cases.

Thank you for being here, minister, and for once again putting together a fine aid package, which has helped businesses and Canadian workers to remain working or getting back to work when it’s feasible. I understand it’s a dynamic process. It’s not static, far from being static. And we are building the tracks as the train is speeding along; I understand that.

One area of concern is the Business Credit Availability Program. There are no issues with the new loans, energy going forward. The concern is with the margin deficits on the existing loans, margined by existing assets, which have now decreased in value. Are you considering additional options or support in that area?

What we’ve tried to do with the approach to the Business Credit Availability Program is to provide government guarantees for new loans so that banks will be encouraged to take on those new loans behind their existing loans. The guarantee of the federal government through the Business Development Bank of Canada and the Export Development Canada is an 80% guarantee for those loans, in two separate tranches but up to $12.5 million. That will allow the banks to bring that money in behind their existing loan, meaning they will have a reason to continue to lend because, as you know, they now have the ability to protect their original loan, putting more liquidity into the system, more credit for their existing clients. And they will have more skin in the game because they will put an additional 20% behind that.

We think it’s a mechanism that should work. It worked in the 2008-09 crisis when more than 11,000 firms were helped in this way. We are also looking at other measures to put in place for larger organizations, as well as the largest of organizations that are experiencing significant challenges as a result of this situation.

There are some concerns with the clients and bankers on the existing loans, so I just wanted to share that with you. I want you to elaborate. Certain areas need specific measures. The program is exceptional in general, but when we expand on the sectors previously mentioned — the accommodation, food, entertainment and culture industries — they employ 2 million Canadians. The restart in those areas will be extremely difficult.

Are other measures or options being considered at this point in time? The next step would be to have the specific measures to communicate some hope in these areas because when I discuss this with some former clients in those areas, they need hope. They need something to look forward to. Maybe in the long-term, consider going back to 100% deductibility on the entertainment expenses. Short-term, perhaps consider eliminating the GST on some of the expenditures. Also, if I go a little further on payroll tax withdrawals, maybe consider deferring some of those payments so, when we do restart, the restart is a little easier. Have you considered some of these options, or are you considering other options for certain industries where the restart will be very difficult?

We have considered some of them and, as you know, we’ve done some of them. The deferral of the GST payable in April, May and June represents about $30 billion in terms of cumulative impact into the economy. That’s liquidity for those organizations. The deferral of individual and corporate taxes represents about $55 billion. Those are pretty significant measures.

We are looking at other things, focused primarily on credit. It is credit those organizations can have to bridge themselves through this. We have announced some of it. We announced the first $12.5 million of potential credit. Some organizations are larger so they will need more credit. That’s something we are working on and are close to announcing.

There are many sectors that are going to be impacted. As the senator across from me referenced, some sectors are particularly hard hit but I’m sure many senators in this room can identify other sectors. We are doing our best to be sector-agnostic by providing support across different businesses and aiming to price it in a way to enable access should they need it, but not enable their equity to be impacted as they access that support. We think it’s important that we do it in an appropriate fashion. Those are the things we are moving forward with in the near future.

Minister, my question is regarding the Canada Emergency Business Account threshold of $50,000 to $1 million. That poses a huge problem for small- and medium-sized businesses that simply will not be able to qualify. I’m thinking of self-employed people, sole proprietors, hair and nail salons, cleaning ladies, other business owners who pay themselves through dividends instead of salary, those who don’t have many employees on the payroll and so on.

Minister, what is the rationale behind this threshold? To your knowledge, how many small businesses will not be able to qualify because of this threshold?

You bring up an important point that I’ve heard from others as well. We are trying to make sure that the system works in the way it’s intended to. The starting point is to make sure we recognize in our system that people have, in many cases, incorporated because that’s an appropriate way for them to manage their tax situation. There are many businesses in this country that are merely the incorporation of an individual in order to have a tax situation. That’s not what we are intending to support with the $40,000 loan. We are looking to support small businesses.

For those individuals who are very small businesses or individual proprietors, we think the Canada Emergency Response Benefit is appropriate. It’s $5,000 per week for 16 weeks, so the annualized amount in that case would be someone getting up to $26,000. I recognize that’s a certain level of protection and not the protection that everyone would want, but we’re trying to make sure we have enough support.

In terms of numbers, the $40,000 is something that can go to over 1 million small businesses, so it’s a very broad measure we’ve put in place, in that forgivable part, to help people through their fixed-cost gap during the course of the next few months. We continue to look at the criteria for this loan, for example, to make sure it is appropriately targeted. Like everything in this challenge, it’s a dynamic challenge, and we need to make sure we have it right. I don’t have anything new to announce in that regard, but it is something we will continue to look at.

Thank you for the answer.

Second, this week the government announced additional changes to the wage subsidy and that hopefully the delay could be reduced from six weeks to three weeks. Sadly, I think six weeks to three weeks is still too long. Many businesses are on the verge of bankruptcy or have closed permanently. Business owners are in a very dark place. More than 1 million employees have been laid off. These businesses and employees need help right now and cannot afford to wait any longer.

Why is the government not implementing immediate and necessary measures that will actually put the money in the pockets of the small business owner, such as rebating the GST they have paid in the last year, which is the kind of support needed right now for them to stay afloat and retain their employees while they are waiting to receive the wage subsidy?

First of all, we are trying to get the wage subsidy out as rapidly as possible. We have found the fastest way that we can do it, and I hope it will be shorter than the time period announced. We are working towards that.

Second, we have provided liquidity for businesses. The deferral of the GST payment and the deferral of taxes have provided immediate liquidity. Those are important measures.

The idea of rebating GST, which people have brought up, is just not functional. There are three reasons. First, businesses hold GST in trust. It’s not their money. They don’t actually own that money, so we can’t rebate something that is not theirs.

Second, it’s very unequal in terms of how it gets implicated. Because of the way GST works, it’s the value add that a business gets, in terms of the GST, which they would have because there are input credits behind it, so it would impact some people in a significant way and others, like farmers, not at all.

Finally, our GST system is different on a province-by-province basis, and the administration of figuring out GST/HST province by province would take so long that it would be a completely ineffective measure.

We looked at it. It doesn’t work, so we’re trying to get money to people as fast as we can and in the most practical ways we can. We think we have found the best way.

I will ask my deputy, Andrew Marsland, to answer with more specifics. Broadly speaking, we are seeking measures to deal with the situation that we’re in and the recovery. That’s the approach we are taking and that’s around how we’re designing the legislation in order to give ourselves those powers. That’s the reason there is a sunset clause for most of these powers. I will ask Mr. Marsland if he has anything more specific to add.

Honourable senators, I believe the amendments that deal with the Income Tax Act do have a sunset clause by their very nature in the sense that they refer to specific periods — March, April, May — with the power to prescribe additional periods as required but no explicit sunset clause, with the exception that those prescriptive powers cannot extend beyond September 30.

We are obviously working on the next steps in our plan, but at this stage it is not far enough developed to give an explicit understanding of what those next steps are.

Mr. Morneau, there are a number of programs that, according to some estimates, help 84% of those who’ve lost their jobs because of COVID-19. The Canadian Centre for Policy Alternatives, however, estimates that 862,000 unemployed Canadians won’t receive employment insurance or emergency benefits.

Do you think that estimate is accurate? If not, how many Canadians do you estimate will fall through the cracks? What are you going to do for those Canadians?

In this time of crisis, we’ve looked at how we can improve the situation as quickly as possible. That means that we’ve created programs over the past three or four weeks. Of course, there will be people that we need to take into account in the coming days and weeks. I can’t say whether those estimates are accurate or not because I didn’t read the report. However, we’re definitely going to take people like seasonal workers, for example, into consideration. We still have work to do.

Regardless of that estimate, have you come up with your own estimates of the number of Canadians who aren’t currently receiving any benefit because of the criteria for these two programs?

We’ve taken people in difficult situations into account, and that’s why we’re trying to find solutions to every problem. I hope we’ll be able to present other approaches in the coming days.

I’d like to pick up on Senator Ngo’s question about small businesses.

I’ve spoken to some people who represent small businesses, including a hairdresser. It’s obviously very difficult for her small business to benefit from these programs because she laid off her employees and can’t open her salon, so she can’t get the 75% subsidy.

Furthermore, the $40,000 loan is complicated because people have to start paying it back in a year. These businesses already have obligations they can’t exactly ignore. Do you believe that expecting people to start paying back the loan a year from now is a realistic time frame given that, according to some experts, we won’t have a vaccine for another 12 to 18 months and won’t be back to normal by then?

First, if the small business in your example has employees who have no income coming in right now, the company can apply for the wage subsidy. That option is available. It won’t have to pay for everything, because 75% of the employees’ income can be subsidized for it. Moreover, if this small business has employees, that means its total payroll is probably over $50,000, which makes it eligible for the interest-free loan, and it won’t have to pay interest or pay off the principal until the end of 2022. That’s two and a half years away, which is enough time. Also, if that small business takes out a $40,000 loan, it will only have to pay back $30,000. That could help the company if it has other things to pay for over the next four months, for instance.

It’s not perfect, of course, but we’re going to consider other approaches, and there are measures we can take. That said, I think there are plenty of options available already to put this small business on a stronger footing.

I’d like to clarify something. Are small business owners entitled to the Canada Emergency Response Benefit of $500 a week?

Owners of very small businesses may access the Canada Emergency Response Benefit of $500 a week.

Thank you.

Minister, this week we have seen several damning media reports outlining several failures to get a handle on this pandemic over the crucial early stages of the process. Your government continually defers to the experts in defending those early failures, but ultimately the decisions and responsibilities for those decisions always rest with cabinet.

I’m concerned about your government’s reliance solely on the Public Health Agency and not on the expertise of our military medical intelligence unit, which sounded the alarm way back in January. This unit relies on information not only from the World Health Organization but also on intelligence shared among our Five Eyes allies, including the U.S., whose intelligence was warning of this outbreak as far back as November 2019.

Minister, why did we rely on a body that appears only to be parroting the World Health Organization and information coming from communist China, and not on our military intelligence unit, which was certainly providing a different picture, if the cabinet was willing to listen a few months ago?

Thank you for the question. I can assure you that we have and will continue to consider all the sources of information that we have, and that will form our response. In our estimation, we need to continue to consider the science and the medical expertise here, and also look toward the examples of other countries and how they are dealing with this challenge — some of whom are ahead of us in the sense that they have already experienced a worse challenge — and we can get some value in considering what has worked and what has not. We will consider all those sources of information, have done so, and we think it is important to do so.

Minister, again, we had intelligence information back in November and January that highlighted the danger of this, and had an urgency underlined in their evaluation of things, when our health officials were saying back in January and February that certainly we shouldn’t overreact and worry. I think the cabinet has to look at why some of that intelligence information didn’t get to the top and didn’t get a fair hearing.

The last time you and your colleagues were here, minister, I cited a 2006 report that was prophetic in its warning about what we’re seeing right now, as far as lack of preparedness for equipment during this pandemic. The report recommended a federal stockpile, the one I asked Minister Hajdu about, and she refused to answer the last time she was here. She has since acknowledged that the stockpile wasn’t maintained, and I’m concerned about what your government is doing now to ensure that gross negligence is rectified, not only for the next pandemic but for the current one.

In addition to the tons of money that we are understandably putting out for federal assistance to Canadians, have you entered into contractual discussions with manufacturers, not only to fulfil the current backlog need, but to look at setting up stockpiles if there is a second wave, a third wave or another pandemic in the future, so we are better prepared?

I would like to start by rejecting the premise of your question. We do and will continue to consider all sources of information as we come up with our plans. We will need to consider the situation that we are in and the preparedness that we have as we consider next steps.

To your specific question about whether we are in the midst of contracting with organizations to provide the appropriate personal protective equipment, the answer is yes. To the extent that your question is asking about things like ventilators, the answer is yes. We are in the midst of ensuring that we procure the appropriate resources for our country now, and looking toward having a secure source of supply on an ongoing basis.

My last question has to do specifically with finances and directly involves the decisions you have made over the last four years. Your government decided to have a deficit management funding approach to the last four years of our fiscal policy.

Do you regret the fact that over the last four years you ran up deficits during a relatively decent economic time? And now that we are in the midst of a real, huge crisis, do you regret not having that $70 billion available in order to substantiate even further the aid you are putting out to Canadians?

First, it’s important to consider the premise of your question. At the beginning of this challenge, we found ourselves in a very strong fiscal position. So what you have seen during the course of the last four and a half years, while we have been in office, we have reduced the amount of our debt as a function of our gross domestic product, and we think that’s appropriate. That puts us in a position where we have the capacity to fund ourselves through this challenge. We will continue to take that approach, of course, when we are not in a crisis period.

I’m sorry, we have to move to another questioner.

Minister, at this time of year, many small towns and rural communities would normally be preparing for fairs and exhibitions. These fairs really are the fabric of many rural communities. Not only do they highlight local industries and agricultural products, but they contribute greatly to the local economy, provide employment for youth and contribute $2.9 billion annually to Canada’s GDP.

According to the Canadian Association of Fairs and Exhibitions, approximately 1 in 10 fairs will not be able to recover from this pandemic, and will have to close the gates forever unless support is provided. An additional 5 in 10 fairs are uncertain about their futures, again the result of the pandemic.

What is the government doing to ensure that these fairs, exhibitions, festivals and agricultural societies will survive this very difficult year?

I think it’s fair to say that many Canadian organizations and many Canadians are significantly impacted as a result of the pandemic. I know that in many sectors, including in small towns and large cities, gatherings of multiple people are not going to be possible. That will present very real impacts.

We are going to need to think about the impacts across our entire economy. They will be in many different places. We are trying to put in place measures, first and foremost, to protect people, and as you’ve heard me say, to think about how we can support businesses through credit availability. Then we will need to think about whether there are specific interventions required in particular sectors. That will be the subject of continuing work. I don’t have anything to announce today, but we certainly understand the challenges.

Thank you. I have a second question. There are many family farms across Canada which don’t have employees; farms run by one or two individuals, in many cases husband-and-wife teams. As a result of the pandemic, they’ve lost market opportunities in full or in part. They are right now making business decisions with respect to planting, breeding and selling their commodities, that have long-range ramifications within their operations, yet they don’t want to take on extra debt that might be available through the FCC program or banks. What can these producers — operators of Canada’s small family farms — expect from your government in order to ensure that they don’t experience a final nail in the coffin for their operations?

In a sense this question is like your last question. There are people across the country who are finding themselves in difficult situations. Farmers are certainly among them. Some of them will have had that 30% reduction in revenue; many of them won’t. But to the extent that they have, they will also be able to have the wage subsidy. To the extent that they find themselves not able to employ the people that they were employing, then they may be able to go on the Emergency Response Benefit. And for those that take advantage of the credit available through Farm Credit Canada, that will be helpful.

But I’m sure there will be other things we’ll need to consider. We’ve looked at a number of things in the food area to ensure our food security, and we will be continuing to focus on this area. Obviously, it is even more important during a time when food security is so much more critical.

My final question centres around the internet and access to the internet in rural and remote Northern Canada. Your programs focus on applications through the internet. How are you supporting those folks who don’t have access to high speed or accessible internet that can help them to apply to these programs?

We recognized up front that this is a challenge with our approach. Not everyone has access to the Canada Revenue Agency for the Emergency Response Benefit. We found that about 70% of Canadians were on direct deposit, which is positive, which is probably something of a proxy for those who have online access as a minimum base.

What we then decided to do was to significantly augment the in-person telephone capability, so people could have access to in-person capability. We know that’s imperfect, and we’re trying to build the capacity, so that capacity is coming from the Employment Insurance group from the Canada Revenue Agency, remembering that a lot of those people — because we’ve deferred taxes — there is some capacity there that would normally have been doing other work. And we’ve stood up some separate teams of call centre people as well. There will be challenging times with the volumes. We understand that, but we’re going to try to support people through it.

Thank you, minister, and welcome again to the Senate.

First of all, I am very pleased that your government has increased the wage subsidy from 10% to 75%. I will point out that I had proposed this increase to you the last time you were here, but you did not deem it worthwhile. Thank you very much. I think you’ve proven to be a good listener, in this case.

My first question is from a group of unemployed workers who contacted me. Many of them feel that the Canada Emergency Response Benefit is unfair, and they are receiving less money than they are entitled to. For example, the maximum EI benefit is $2,484 a month, or $574 a week, but workers receiving the CERB are receiving $484 less in gross income every month. That’s a lot of money for someone who is unemployed and has responsibilities.

Minister, why does the Canada Emergency Response Benefit penalize a worker who paid into EI and is receiving less than he or she is entitled to?

That’s a good question. We’re in an extremely difficult situation. A pandemic is a serious problem. We decided that, right now, the Emergency Response Benefit must be offered to everyone. It is necessary. Afterwards, we’ll continue with our Employment Insurance program. This means that, during this period, we’ll use the Canada Emergency Response Benefit for everyone and, subsequently, people will once again be able to apply for the EI program.

Clearly, there are differences between the Emergency Response Benefit and the wage subsidy. This is because of the pandemic. We are in a very difficult situation right now, and we have taken these steps in a very short period of time. We’ll see whether we need to make any changes in the coming weeks, but for now, we believe that we are protecting most people with our programs.

My last question has to do with the anticipated federal government deficit, which will be enormous. To the $100 billion you’ve accumulated over the past four years, we must now add nearly $200 billion for programs to manage this crisis. If we consider that the Canadian government’s revenue will decline by around $550 billion, we are talking about a cumulative deficit of nearly $400 billion to $450 billion.

Given that Canada’s national debt is currently $700 billion, that means that by next fall Canada could end up with an accumulated debt of over $1 trillion, which represents $50 billion in annual interest payments alone. Faced with this huge challenge of such a massive deficit, has your government already started preparing a recovery plan?

Quebec is thinking of boosting certain industries such as the construction industry. Do you have a strategy in mind to revitalize these businesses and, especially, give them funding, so that they can get back on track?

That’s another great question. Like virtually every other country, we’re focusing on how we can protect our citizens and our economy right now. We know for sure that we need to make unprecedented investments and that we’ll face some challenges because of those investments, but we believe the most important thing is to protect our current status and our economy for the long term. We need to invest. After the crisis, we’ll be in a better position, and we’ll make other investments to boost our growth. That is for sure.

We’ll also have to tackle our fiscal challenge, but for now, I’m focusing on the crisis. We will certainly run into more problems going forward, and we’re going to work with you and other parties to assess the issue.

Minister, I’m right behind you, physically.

I really like to hear that. You can just stop right there.

Thank you, minister and Mr. Marsland for joining us today. I will, with your indulgence, put all of my points into the beginning here to give you time to answer.

The G20 leaders met by video conference on March 26 and together said they would do whatever it takes to bolster the global economy. This has led to an injection of $5 trillion. My question related to that is: There is a consultative aspect to this. Finance ministers and central bank governors were charged with monitoring this, as was the Financial Stability Board as well, with talk of economies opening up, so to speak, at different times. What is the extent of the consultation between you and your colleagues? If you could give us a bit of an update on that, I would be grateful.

The second, Senator Black has really asked the question, but it does relate to the internet and particularly in rural areas.

We are talking a lot in this chamber and across the country about a guaranteed livable income. How about a guaranteed livable internet as well? Budget 2019 devoted $1.7 billion to establish a universal broadband fund. Perhaps work could be enhanced in this area and particularly with our telecommunications companies.

Working with Senator Boyer of Ontario, we are seeing people in remote First Nations, Métis or Inuit communities that are not tech savvy or even connected to the internet who are used to earning their meager living from selling or sewing crafts and other things and they really have nothing now. Although the targeted distinction-based funding is helpful, it isn’t enough to alleviate the financial issues that the Indigenous people in the cities are facing that also make their living by selling crafts, for example. Is there any relief in sight for them?

Thank you. Those are three separate issues. On the first issue during this time of crisis we have been fairly extensively involved with our colleagues around the world. The Prime Minister has been involved with the G20 and with the G7. I’ve been involved with finance ministers and central bank governors around the world through the G7, the G20 and the International Monetary Fund.

This coming week we have a number of meetings. On Tuesday morning, there is a meeting of the G7 finance ministers; on Wednesday morning, a meeting of the G20 finance ministers; and Thursday morning, a meeting of the International Monetary Fund, finance ministers and central bank governors. These meetings will help us to continue to update how we’re doing in different countries. You are seeing measures that are fairly similar across industrialized countries in terms of the scale versus the economy, as well as in terms of the focus on supporting people and businesses. There are differences from country to country, but the approach is broadly similar. So we will continue to do that. It will give us insights into how we can continue to move forward in this dynamic crisis. Those discussions are also happening on a day-to-day basis with various of my colleagues.

With respect to internet availability across our country, it has been a key area of focus. Obviously that’s of particular importance now, where we’re all relying on it for our day-to-day lives. We think that some of the things we’ve done, the accelerated capital cost allowance, the funding we put towards the last mile and the funding that’s also through the CRTC have had some significant and positive impacts, but we do know there is more to do there, especially on some of our communities that are farthest away.

Finally, around Indigenous Canadians’ challenges during this time, we understand they’re real. The reason we put money out right at the very beginning was we knew that these were places that were going to be impacted significantly. Happily, we’ve not seen as many cases in some of the disparate communities, but we know the problems could be very real. We are looking at funding that we might need to be doing for our northern communities. We’re also looking at how funding can be provided for some of our other Indigenous communities. There is ongoing work. Obviously everything we are doing is urgent on that subject as well.

Great to see you. You folks have been working hard. I have more of a question that may follow Senator Boehm’s. In regard to the delivery system, do you have a war room? What type of relationships are you setting up with the provinces, the governor of the bank, et cetera? Can you give us an overview of this massive activity at this early phase? As this progresses Canadians will probably look for some form of feedback, transparency and lessons learned so that the next time we’ll have a strategic plan in place so when pandemics occur we will be better prepared.

This is not a criticism of Canada or the government. This has happened in the United States. It happened all over the world. There are some countries that are more advanced than others in terms of how they address it. From your perspective, how do you set up your war room and establish relationships? Can you give us some insight of how this can work and where is it going to take you? When you want to report at the end of the day — and I know it’s very early — will that give some comfort in terms of direction or a strategy moving forward?

That is an important question, and something that we are going to need to reflect on when we have a little more time.

If Andrew behind me looks tired, it’s because I’m sure he is. All of us have been working pretty much around the clock. That has meant that we have needed to find new ways to work together, because we’ve been working around the clock, but we haven’t been working in the same rooms. We’ve all been in disparate places, mainly in our homes. As an example, we have been in regular communication with the Office of the Superintendent of Financial Institutions and the Bank of Canada during this time period. When I say “regular,” I mean almost continuous.

There were periods of time where I think we had a conference call line that everyone was using all night long, including Andrew sitting behind me, in order to get some of the direct policies done.

We’ve set up some procedures for working across the provinces, so we have fairly regular contacts. I have a regular, once-a-week contact with all of the finance ministers in which we are sharing information. Also, we have good informal communications.

Luckily for me, I have been doing this job now for five years and I have strong relationships with many of the finance ministers, which has been very helpful in working together. The lessons learned will be important for us. We’ll need to think about how we can rapidly deploy resources for challenges like this. So far I would say that’s worked quite well.

Similarly, the finance, health, Prime Minister’s Office and the employment departments have been the most implicated areas of government, with the procurement department being important as well. We’ve been working together quite closely with working groups.

Turning to service glitches Service Canada is closed down so it’s harder to get through or access. If you go through the internet, you can send messages in, but you don’t have that service contact.

Are you able to flag service glitches at this time and then immediately address them so that you can at least fix problems temporarily, which will lead to a longer-term fix for these types of situations?

We have to take questions like that and be nimble. We chose to deliver the Canada Emergency Response Benefit and the wage subsidy based on what we thought was the most robust system we had in government. The good news is, it is working. Last week we had more than 3 million people come on to the CERB. That’s in a very short time period. You probably heard about some of the very short windows. It appears robust. I’m sure there are Canadians who are waiting in line for some things on the phone. That’s inevitable with this sort of volume, but what I understand so far is that it’s working.

The CRA is doing a marvellous job at setting up these resources, but we need to stay on it. We are going to have challenges with the kinds of volume that we have. It’s inevitable, but I would say so far so good.

Minister, thank you for being with us today. I have two questions to ask you about not-for-profit organizations. My first question is about organizations that work with abused women, women who are experiencing domestic violence right now. Domestic violence is an unfortunate reality in our society, and being confined at home only makes matters worse.

In the last budget, you announced additional funding for shelters. With shelters already at capacity, what is being done right now to get that money to those organizations as fast as possible, so they can rent hotel rooms or apartments and give these women a safe place to live?

That’s a very good question. We know that the current situation is creating problems because people are confined together, particularly vulnerable people. That is why we have been looking at the need to provide funding for women’s shelters from the beginning. We started with $50 million, I believe. I don’t have the exact details on how we are going to proceed, but I know that we have allocated funding for that.

We will be watching out for any problems in the coming days and weeks to see if we need to do more.

But do I understand from your answer that the money is not yet running to these shelters?

What you need to understand is I don’t know exactly the mechanism, but we’ve already allocated the funds. I’m just not sure — not because it isn’t important, but there have been many things I’ve been working on. I’m not sure exactly how those funds have been allocated.

The next question is about this wage subsidy program. How is it adjusted to take into consideration the particularities of the charities as suggested by my colleague Senator Omidvar from Toronto? I think she wrote to you about that.

We found that for the charitable sector, first and foremost, in many cases they were going to be facing the same issues as other organizations — significant decline in revenues. However, it would be particular in the charitable sector in the sense that some charities would not be losing money if they had government sources of revenue because that government source of revenue might not go away, but they would be losing all their donations. For other charities, they might have government sources of revenue because governments might actually be paying their daily stipend, for example, if you’re in a shelter or something. For those charitable organizations, we decided to choose whether or not to include government revenues in their test for whether their revenue went down.

For example, if you were in a situation where you had government revenue, you just had your donations go down and that government revenue was stable, you could not use the government revenue and just demonstrate donations went down. If you’re in a situation where you had government revenue that went down because of your source, you could use it and show that it went down significantly.

We’ve given a double test for charities that we think puts them in a position to demonstrate their challenge. And then, of course, we have specific supports for certain kinds of organizations — food banks, shelters, as you just mentioned — that are particularly challenged during this time. We’re going to continue to think about organizations that are effectively support mechanisms for people during this time. We need to find a way that they have the resources that they need.

Thank you, and may I beg you to make sure the shelters get the money as soon as tomorrow or the day after because they require it now? Thank you, minister.

Minister, this question comes from one of our colleagues, Senator Patterson from Nunavut. The NWT & Nunavut and Yukon Chambers of Mines released a joint letter stating:

Employee continuity is critical to the success of Northern exploration and development companies. Not only do their employees have the technical memory and knowledge of the projects they are advancing, they hold important, established relationships with local Indigenous and community leadership, with hunters and trappers organizations, regulators, and local Indigenous employees and service providers. There is tremendous value in these relationships, a value higher than would be recognized in the proposed emergency wage subsidy.

Minister, how does the bill capture companies whose work is non-revenue generating, such as junior mining companies and mineral exploration companies?

I imagine there are many companies in the North that are finding themselves particularly challenged during this time period, just as there are across the country.

I think we have extremely valued employees in those sectors, as was identified in the letter you’re quoting from, just as we have extremely valuable people in other sectors of the economy. Our goal is to support as many people as we possibly can through this crisis, and that means what we’re trying to do is to deal with those companies, first of all, that are able to keep their people on; in some cases perhaps the mining companies would be good examples where they want to keep these people on, and that’s important. That’s why we hope that the wage subsidy will be something they will use and perhaps if they have the capacity, they will top up the employees’ wages fully. If they find themselves not able to do that for whatever their reason is, because they think their long-term prospects are such that it’s not plausible, then presumably those employees would go on the Canada Emergency Response Benefit to protect them during that time.

If there are specific sectoral issues that we need to consider, we will be looking at those, but broadly speaking, our hope is that for very valued employees like the ones you are talking about, employers would keep them on and they will be able to use the wage subsidy to do that.

You suggested earlier that we might have some recommendations for you, and I suspect that the senators from the North might take you up on your offer.

My next question, minister — and we’re trying to get in as many of our senators’ questions as we can — is from Senator Percy Mockler from New Brunswick, and it concerns our students.

It is vital in this time of the COVID-19 that Canada enables its students to continue their education without distraction of financial impediments. How are you going to ensure that all Canadian students, especially those without independent financial means, have the confidence and ability to continue to pursue their education with a minimal amount of disruption?

I think you heard me say earlier today that we do see this as a critical issue. We’re working on it now. We are recognizing that the time period is short. Two of my four children are in university; one is finishing in two weeks and one is finishing in about four or five weeks, so I know the timelines. We’re certainly working against those timelines.

For those students that are on grants and loans, they can continue those grants and loans during the course of the summer for the low- and middle-income students. They can continue to do studies during the summer if they choose. We recognize that won’t be something all students will want to do and many will want to work, so we are looking at various ways we can be supportive on that. When I have more to announce, I will, which I hope will be in the not-too-distant future.

Have you decided whether students will qualify for the CERB, and are you looking to do more under the Canada Student Loans or Canada Apprentice Loan program?

By definition, some students will qualify. The criteria for qualifying are that you’ve earned $5,000 or more in the last year, that you’re a Canadian resident and that you have lost your income as a result of COVID-19. So in many cases, students who were working part time during the student year, and that’s approaching 50% of them, will have actually lost that revenue and passed the $5,000 threshold. Many will be eligible for it, but we will be looking at other measures to support those who aren’t.

I have two questions at this time. My first is on behalf of Senator Bovey from Manitoba and Senator Cormier from New Brunswick. It involves our arts organizations and the wage subsidies. Given that the arts organizations are not-for-profits, the sector has very real concerns about their ability to pay that 25% of staff salary. Their cash flow is nil, and they’re having to refund monies to ticket purchasers, in some cases, private and significant sector donors.

Some organizations have endowment funds , which is good, and surpluses can be added, but federal regulations limit the use of capital in those endowment funds in determining the percentage of annual earnings from such funds. Might these federal rules be waived during this crisis so that organizations can use the monies in their unrestricted endowment funds to assist in paying the 25% of the staff salaries?

First of all, just for clarification, those organizations are not required to pay the 25%, so there may be just an understanding issue that if they don’t have the capacity to pay that, they are not required to. We’re encouraging people to do it if they can. That might make your question less urgent for those organizations.

Second, another senator asked a question about long-term systemic changes, and whether we would change our approach to taxing things or to endowment funds. We are not seeking to make systemic changes that would be long term in terms of their impacts and implications for what we hope is a shorter-term issue.

The idea of fundamentally changing our approach to endowment funds to solve a problem would not be our first, best approach. Happily, it is probably not a problem anyway, the way you have identified it.

Let us hope so. Thank you for the answer.

The second question deals with wage subsidy, but now going on to larger, publicly traded companies. It is a different focus.

Given the number of people publicly traded companies employ, I support that they should be able to access this service. However, I worry about potential bankruptcies and acquisitions after this crisis is over. Not too long ago we had the case of the Sears Canada bankruptcy. We saw the company strip itself of assets to pay shareholders, despite being unable to fulfill its pension obligations to its employees.

Would the government consider measures being put in place for a temporary moratorium on dividend payments and stock buy-backs or executive pay raises for the companies that receive this money during the COVID-19 crisis, and perhaps for a short time afterwards, even if these companies quickly become profitable again?

I think the premise of your question is on the idea that the companies receive the money. That is not what we’re doing. The company is applying for these funds. They have to demonstrate that they have paid the money out to their employees. The money is actually going to their employees. It can’t be used for executive compensation or share buy-backs or those sorts of things because it has already gone to their employees.

I don’t think that premise is one that we’re concerned with. It will be important for us, as we think about the approach we take to providing credit to organizations, and our approach to dealing with eventual challenges, if they happen, of companies going into CCAA. There will need to be some consideration of conditionality in those situations, potentially. We are not considering that quite yet. We hope to avoid those situations by providing appropriate credit so that organizations can get through this time.

I just want to be sure that you have committed to giving me a written response to the technical question I asked earlier. Will I get a written answer?

Or Mr. Marsland can answer that right now if you want.

I have other questions, but go ahead and answer.

The question you asked is an excellent one because it was exactly the question I had when I read the draft. What is the difference between those two components?

I will step back and explain the provision. The provision is intended to deal with circumstances where a corporation, for example, has a subsidiary in another jurisdiction and all its product goes to that subsidiary and it is marketed in the other jurisdiction. This is essentially intended to look through — because the loss in revenue is borne by a subsidiary outside of Canada — and allowed to recognize that in reality the revenues of the Canadian corporation have dropped, that are reflected in the sales made by the subsidiary; the selling corporation.

The reason those two provisions are similar is they are intended to deal with circumstances where a corporation in Canada is selling its output through two or more subsidiary corporations in different jurisdictions. The formula is intended to get the right result when you look at those complex organizational structures, corporate structures that exist in, for example, the resource and the mining sector and so on.

The next question is from Senator Batters.

Mr. Minister, the government’s first COVID-19 bill gave you the power to create a Crown corporation wholly owned by the government to promote stability and maintain efficiency. Bill C-14 includes a sunset clause stating that the Crown corporation cannot be created after September 30, 2020. However, the clause does not prevent the government from creating the Crown corporation before September 30, 2020, and spending the money after that date.

Senator Batters’ question is as follows: Mr. Minister, do you intend to nationalize entire sectors of the Canadian system using that loophole?

The important thing here is that we want to have the necessary powers to handle a situation where companies are under the CCAA.

We don’t know what the future holds, but we want to have the appropriate powers should that situation arise, as we saw in 2008-09 when GM and Chrysler were dealing with some difficulties, for example.

I hope we won’t be in that situation, but we do have to consider that possibility.

My second question is about the Canada Emergency Business Account. At RBC and CIBC, the application forms for the $40,000 include a section detailing the Government of Canada’s eligibility criteria for the loan. The criteria include:

The entity is not owned by individuals that hold political office.

The entity cannot be owned by an individual who holds political office. This excludes municipal officials, provincial members and band chiefs. It excludes a whole bunch of people.

Did your government ask that the hundreds of businesses owned by people who hold political office, at any level, be excluded?

That’s a good question. I know that is something we need to keep in mind at all times.

I have nothing to add.

So, you did not request this.

No. I cannot say, but if it’s important, we can look into your question and get back to you.

Please do.

Thank you, Minister Morneau and Mr. Marsland, for being with us today. Thanks to you and your hard-working team, including Sean Fraser, Member of Parliament for Central Nova — my member of Parliament — for all the efforts you are making. Canadians appreciate this Canada Emergency Wage Subsidy program as well as your willingness to make adjustments as you go along. I think that’s really important to acknowledge.

I have three questions. My first question is, could you tell us what the response has been to that initial 10% wage subsidy? What is the status?

My second question is, can you speak to any additional measures you are considering now to complement Bill C-14, in terms of the tech start-up sector that has had issues with the various programs? Is there anything further that you are considering for the charitable sector?

My third question is — recognizing that you are extremely preoccupied with the immediate crisis in front of us — what planning might be under way for the post-peak pandemic period to power up our economy and further take care of Canadians impacted by this crisis?

Thank you.

To the first question around the number of companies that have made use of the 10% wage subsidy program; I don’t have those numbers. It is likely too early to know those numbers. I would expect it will be broadly used because basically every business with 18 or fewer employees can get $1,375; a 10% wage subsidy. If you know someone who is not using it, you might want to suggest they should consider that. I expect that will be very broadly used and we expect it to be a support for everyone.

In terms of the tech start-ups, the wage subsidy changes we have put in place have included some things that were important for that sector. A big concern around that sector was either for businesses that were brand new or for businesses that were in a very high-growth phase. In our original approach to the wage subsidy, we were thinking about revenue this April against last April, for example, and if you were a tech start-up and last April you had $100,000 worth of revenue and now you are at a $500,000 annualized pace of revenue, then you will not be able to show the reduction in revenue. That’s why we chose a secondary test, which is their revenue in March versus what happened in January or February, for example.

That was really important for that sector. I’m not saying there will not be other challenges, but that was an important issue. Similarly, as referenced behind me, we have done some things around the charitable sector that allow them to consider their revenue in different ways to improve their situation.

Finally, around next steps, we are in a phase that is very difficult. We are going to continue to see challenges, and we are triaging those challenges on a daily basis. I do have an internal team working on next steps as we move out considering how we can do that, and they are using some external resources as well. I imagine we will be turning our attention to that as we get through this particularly intense phase.

Just to probe a little deeper on the tech start-ups, some of them are so new and fast paced they don’t have revenues yet, so these organizations are starving. Is there anything to help them through this other than what we have seen here?

My second question is: Is there anything else in the works besides this and CERB for the charitable sector?

To be clear, we are trying to focus on organizations impacted by COVID-19. For those pre-revenue businesses, they are largely funded by venture capital and other sources of funding. If they have already sourced funding, it’s not necessarily the case that those have gone away, so there needs to be a demonstration of that sort of reality. Everybody has a problem and the job is to figure out which problems are most urgent and important. We will have continuing things to say on the next steps in many areas.

Thank you, minister.

I have two questions. The first question is from Senator Wells in Newfoundland and Labrador. The second question will be from Senator Yonah Martin from British Columbia.

Minister, our seniors are being affected the most by the COVID-19 pandemic. My concern is regarding the financial burden COVID-19 is causing seniors in my province of Newfoundland and Labrador and in this country. Our seniors are isolated. They rely more on other people for essential errands, and this requires supplementary financial assistance throughout the duration of the pandemic.

Seniors rely on medications more than any other demographic. Drugstores are only allowing limited supplies to be dispensed at any given time. This results in increasing dispensing fees and extra costs that many seniors cannot afford.

The question is: How will the government address this important issue when many seniors live on the edge of poverty and extra expenses for one item will mean less money for other essentials?

First, we recognize that seniors in many ways are the most impacted by this crisis because they are most anxious about their health, so supporting the health system is critically important to give confidence to seniors.

Obviously we don’t want seniors to have to pull money out of their RSP at the same pace, and that’s why we lowered the amount they need to pull out of RRIFs by 25%. That won’t impact many of the seniors that you’re talking about, the most impoverished.

The good news is that for the seniors in the most impoverished part of the senior population, they are continuing to get their sources of income, their sources being the Old Age Security system and the Guaranteed Income Supplement, so unlike other Canadians, their sources of income are not diminished. One of the measures we put in place, the GST low income tax credit, actually has an implication for more than 80% of single seniors and more than 40% of seniors in couples. They have all received a significant boost in income even though their sources of income have not gone down. We will need to continue to look at this, but we think we have made some decisions that will impact the senior population positively.

Thank you. The second question is from Senator Yonah Martin in B.C. It’s related to the question of Senator Coyle regarding the new start-ups that got their business licences to operate this year and have no record of income in 2019-20. To build their business, they have to use their own personal savings to get started in anticipation that they will generate revenue this year. The government forced the nonessential businesses to shut down, and yet they don’t meet the requirements for the new program that you have announced.

When will you introduce relief measures specific to start-ups or revise existing programs to include these businesses and families that are barely hanging on through no fault of their own?

First of all, it’s important to recognize that these businesses do have access to a number of things. So the thing that you’re referencing is the Canada emergency wage subsidy, but employees in those businesses do have access to the Canada Emergency Response Benefit, like anybody else. Second, if the businesses actually have a payroll, they also have access to the Canada Emergency Business Account, a $40,000 no-interest loan. There are other things available to them, they are just not the specific wage subsidy because of that revenue test.

We will, of course, continue to look at various subsets. We’ve tried to find measures that can hit a large cross-section of Canadian enterprises. We do know there are some organizations that will be in a particular category of challenge that we’ll consider. We’ll consider that in considering as well the things that are available to them and whether it’s appropriate to make sure decisions.

When do you think you will introduce the relief measures for those start-up people?

I didn’t say I was introducing anything. There are certainly many people across the country who have concerns. I appreciate those concerns, and we’re trying to look at how we can support people appropriately. That includes considerations of equity and fairness as well as the appropriate measures of support.

Before I ask my question, minister, I want to acknowledge the complexity of managing such a crisis, in terms of both health and the economy. I would like to commend the efforts being made by the government, businesses, and, of course, workers.

I would like to begin by quoting Quebec economist Pierre Fortin who said, “There is no conflict between saving lives and saving the economy.” The government is making a necessary and temporary choice in this initial phase, which, as the title of the bill states, is in response to COVID-19. The measures include investments in health and, at the same time, compensation to address the economic impact of the fact that our economy has truly ground to a halt.

My question has more to do with the next phase, which will take place once the temporary measures are lifted, when the economy and jobs gradually return, and once recovery is possible without causing a second wave of the pandemic. Again, we are talking about a recovery strategy that combines both health measures and support for the economy.

In this gradual return phase, I would like to know what scenario you are considering and what are your main criteria for deciding what action the government will take in support of this economic recovery. Also, in these scenarios, what do you believe will be the impact of the gradual return of exporting to the U.S.? As we know, the United States is facing a huge crisis right now. The pace of their recovery will be different than ours. In this scenario, with our economies so intertwined, how do you plan to adopt progressive measures related to the difficulties or impacts on our exports to the United States?

That’s a good question, but I don’t know what the future holds. At this point, it’s hard to predict what we will do.

As I said, there is now a team in my department that is working on the next steps. These people are working with experts. Obviously, we don’t have enough information yet to know what will happen in the next phase. That is clear.

It is important for me to be here with you today. Of course, I will probably have other opportunities in the coming weeks to appear before you again, and I’ll be able to give you more information at that time. I know some things today, but I will have more information on the next steps when we have moved on to another phase and we can make predictions.

Other countries around the world are in the same situation as we are right now. I am in contact with my G7 and G20 counterparts, and we are all in the same situation, which is constantly changing. We need to make investments to protect our economy, our workforce and, of course, our businesses. We can expect a second phase where we will be in a better situation. That’s how we have to proceed. We will make decisions when we have enough information. If we can get more information from other countries that are in a better position than us, we will be able to examine their way of doing things when planning our next steps.

I have a supplementary question.

I’m sorry, senator, but your time has expired.

Good afternoon, minister. My question follows on Senator Plett’s question. It is also on behalf of colleagues from the North, particularly our senators from Yukon, Northwest Territories and Nunavut.

The specific question is in the same category as so many others. What exceptions are you willing to make to the existing programs? There are so many special cases out there. In this situation, the special case is exploration companies, mining companies in the North. You know they are quite important to the economies of the North because they generate income and activity, particularly for Indigenous people.

The specific request that has been put by our colleagues in the North, on behalf of the exploration sector, is whether you would consider a change in the eligibility period. I think they have specifically asked to use a full-year eligibility for 2019, rather than three months or year over year, and maybe to use a different comparator period, such as protected revenues for 2020. This is a generic question on willingness to look at a reference period for the calculation of the 30% loss.

Over the course of the last month during this crisis, I think you have seen us recognize that we’re not going to get everything right at every step along the way. Before Andrew and I came in here, we were talking about the fact that we have basically done five years of policy in five weeks. The perfect is going to be the enemy of the good in this situation.

We have moved forward on measures that we know will have the broadest potential positive impact, and we’ve accepted that there will be things that we need to reconsider, potentially fix or amend.

I don’t know whether what you’ve just identified from the mining sector is a good idea. There are many things we would need to think about. I don’t know if the mining sector’s revenues were impacted in a way where someone is trying to present something that is particularly positive for their industry. We’d need to evaluate it, but nothing is out of the question. We will evaluate it with the appropriate due diligence as we would for any other request to consider whether it makes sense or not. Then we would recognize that we cannot make an exception for every single industry and situation in our country, however big or small. We need to think about the ones that have the biggest and most important impact, otherwise we will not get anything done that will have the impact we are trying to achieve.

Thank you, minister. I commend to you the letter they have written to your officials so that you can look at it in the context of the special circumstances they seem to have.

My second question is on the loan backstop that the government is offering to small businesses administered by banks, interest free, with 25% waived at the end of the period if companies cannot meet the loan repayments. It’s a terrifically generous offer, but I wonder if you worry a bit that these loans might be taken by small businesses to service their loans to the commercial banks at the high interest rates they have borrowed from and, in effect, that these government backstop loans to small businesses are a subsidy to the big banks. Is this not a reason for us to maybe push the banks a bit harder to do their part for Canadian small businesses?

It’s important to know that we have been in pretty intense negotiations with the big banks for a number of weeks now. I think the premise underlying your question and other questions I have heard here today is that we haven’t been in the process of pushing the banks. That’s a false premise. We have been working hard to push the banks to get to the right conclusion.

The biggest and most important thing we have done with the banks is that we have pushed a huge amount of liquidity out into the system — $500 billion plus — and now we need the banks to use that liquidity to actually get credit out into the market. It has been about that negotiation around what sort of guarantee would be big enough that we would encourage them to get the lending but not so big that we don’t still have the banks with skin in the game. That was an important and consequential negotiation that will have important impacts on the overall business sector. That $500 billion plus is really the biggest single thing that can impact our economy, but we have been pushing them in other ways as well.

I’m not in any way suggesting that we don’t have more work to do. Your premise is correct; the $40,000 business loan for those small businesses is helpful for the banks, but it’s also helpful for those small businesses, which is really what we are trying to do. We know that it provides the banks with more ability to have capacity in other parts of their books, which we want. Now we need to ensure they use that capacity to get lending out, which we are working on, and they are as well.

We’re not finished. We will continue to work with the banks to ensure they are stepping forward and taking the responsibility they should.

Minister, because Canadians and the businesses that hire them so urgently need financial assistance, I don’t plan on opposing Bill C-14. However, this is the second time you’ve appeared before us to talk about economic measures that, although necessary, are also meant to fix some of the previous bill’s shortcomings. Which brings me to my question, which follows up on Senator Carignan’s question about the cultural sector.

Are you sure that your many advisors and public officials have a good political and economic picture of the situation? Some of the government’s changes seem to be steps backwards or seem to be changes to glaring oversights that were raised in the media by analysts and observers.

In politics, it’s important to ensure that the necessary analyses are done in order for the proper steps to be taken. That takes time. That’s the way it is.

We tried to put our policies together as quickly as possible. Obviously that’s difficult. We looked to examples from other countries and other crises. This situation is different; it’s dynamic. That’s why we have to look at our approach and improve it. That will be our approach going forward. We know we can’t come up with something perfect. We know our approach will have to keep changing to reflect a situation that is most certainly going to evolve over the coming weeks. I think we’ve found the right approach.

I’m not sure you’re going to like my second question, minister. Your government has posted several deficits since taking office. In spite of all the money your government had, I don’t think you consistently set aside enough funding to purchase the essential equipment needed for a pandemic. According to multiple sources, this government, and perhaps previous governments, has known for 14 years that funding for new equipment needed to be allocated. In light of this pandemic, don’t you think Canadians deserve an apology today?

We believe that today, it’s crucial that we make major investments in our economy to keep it going in future. In these difficult circumstances, we’re being forced to make unprecedented decisions. There are sure to be more challenges ahead, but with a working economy, and with our workforce, we’ll be in a better position moving forward because of the actions we’re taking.

Thank you, minister.

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.

Honourable senators, the sitting of the Senate is resumed.