Appropriation Bill No. 3, 2020–21
Third Reading
June 26, 2020
Honourable senators, we have before us Bill C-19, Appropriation Act No. 3, 2020-21, which seeks approval for an additional $6 billion of financing for the government’s operations.
Aside from the fact that this figure includes $1.3 billion of COVID-related spending, there is nothing unusual about adding $6 billion in votable spending to the government’s bottom line. Last year, Supplementary Estimates (A) requested an additional $4.9 billion, and the year before that it was $8.1 billion. This request falls within the same range. So if we stopped right here, everything might appear normal, but this is far from the reality.
Over the last 10 years, the median amount of statutory spending included in the Supplementary Estimates (A) was $16 million. This year, that amount is 160 times greater, coming in at $80.9 billion. Of that, $80.8 billion is for COVID-19 measures.
This is a staggering amount of statutory spending for the supplementary estimates. It is almost one third of our annual budget and is only half of what the government has committed for COVID relief. It is a clear reflection of the devastating impact that the pandemic has had, and continues to have, on our country.
Even though most provinces are well into their recovery phase, Canada is still reeling under the impact of COVID-19. More than 100,000 people have contracted the virus in Canada and over 8,400 people have died because of it.
Our mortality rate has been steadily climbing and currently sits at 8.3%, the ninth highest in the world and much higher than the United States’, which has been declining and currently sits at 5%.
The nationwide lockdowns have blunted the health impacts of the pandemic, but they have also resulted in a national economic crisis. From February to April of this year, 3 million jobs were lost nationwide, causing our unemployment rate to spike to 13%. Another 2.5 million Canadians managed to keep their jobs but saw their hours drop by more than 50%. That’s 5.5 million Canadians who have seen their employment significantly impacted by COVID-19.
The impact of this has not been uniform. Some people and some sectors have been hit harder than others. Between February and April, employment among lower-wage workers fell by 38.1%, compared to 12.7% for all other employees.
Employment losses for women have been greater than those experienced by men, and now men are returning to work at a rate twice that of women.
In April, merchandise exports fell by 30% and imports dropped by 25%. Imports of motor vehicles and parts are down almost 80% and accounted for more than one half of the overall decline in Canadian imports. Energy exports fell by over 40%, while energy imports fell by more than 50%.
Although the employment numbers started to improve last month, we are far from being out of the woods. In spite of some people getting back to work, our unemployment rate actually rose even higher in May, from 13.0% to 13.7% because more Canadians are now looking for work.
Amongst returning students, unemployment rose to 40.3% last month. And over 1 in 5 Canadians were part of a household reporting difficulty meeting their immediate financial obligations, an increase from the previous month.
Colleagues, the International Monetary Fund has warned that Canada’s economy will retract by 6.2% this year, and the OECD tells us that the world economy is on track for the worst recession in a century.
It is clear that although the health impacts of this pandemic have been only a fraction of what we were told they would be, the economic and fiscal challenges have been much greater and have only just begun. We find ourselves in a time which is far from normal. But it is not just the COVID pandemic that makes these times unusual. Our country has experienced blow after blow over the last few months, ranging from the senseless, murderous rampage in Nova Scotia, to the outcry heard across the country over the murder of George Floyd, to the widespread call for action on systemic racism.
Yet alarmingly, in the midst of this, Canada finds itself with a government which refuses to get back to work even when it is safe to do so. Like Senator Marshall said in her speech on Monday, “. . . it seems like the government wants everybody back in their workplaces except parliamentarians.”
I’m not talking about returning to a full slate of MPs and senators. I’m talking about a refusal to return to regular sittings, which could take place in a safe and responsible manner that respected public health guidelines, much like we are doing right here today.
It is absurd that the Prime Minister can gather with thousands of people on the lawn of Parliament Hill to protest his own government’s inaction on racism, but cannot bring himself to sit in the House of Commons in order to steer the nation through some of the most troubled waters it has seen in a century.
For three months, Canadians have been subjected to the Prime Minister’s daily scolding sessions from the front of his cottage, admonishing us that the science clearly shows we need to stay home to protect the most vulnerable. But then suddenly, all that science is thrown out the nearest window to make room for a protest.
I’m not questioning the significance of the protest. I’m challenging the Prime Minister to give the same priority to Parliament that he gives to a photo op. Canadians do not appreciate this kind of hypocrisy.
I cannot begin to describe to you the number of families who were robbed of the opportunity to properly grieve the loss of a loved one during this pandemic. Mothers, fathers, grandparents, siblings, friends, sons and daughters have been laid to rest without a final farewell. The hearts of those who loved them were broken twice, once from the loss and again when they were forbidden the opportunity to say goodbye.
And yet after chiding Canadians for weeks not to break with social distancing rules, because beating this pandemic requires all of us to work together, the Prime Minister unapologetically broke those very rules himself, with his photographer in tow to capture the moment.
Colleagues, even an esteemed member of this chamber boasted recently about breaking social distancing rules in order to attend a memorial on the East Coast.
She said, “It was an emotional few hours where, notwithstanding the virus distancing requirement, I could not resist hugging ... I will pay whatever fine.”
Colleagues, I’m sure it was emotional and rightly so. We have seen too many tragedies unfold in the midst of this pandemic and they have all been very emotional. But what gives certain parliamentarians the right to preach one set of rules and then live by another?
No one had forgotten about the terrible incident in Nova Scotia only a few weeks earlier, where 22 people were murdered. In spite of this devastating tragedy, social distancing rules were not lifted to allow for funeral gatherings. Instead, people could only attend an online vigil streamed live across the country.
Grieving is hard at the best of times. It is even harder when there is no one to hold you.
Make no mistake, this kind of hypocrisy is how grief turns to anger, and anger to cynicism.
How can we wink at this behaviour and pretend it’s okay and then act surprised when people become distrustful of government and those in authority? I find it preposterous.
These are not normal times. We are in the midst of a pandemic and the economic devastation that resulted from the lockdown. We have a Prime Minister who believes there’s one set of rules for himself and another set for everyone else. He refuses to give the same priority to Parliament that he gives to a photo op. He insists that we must carry on indefinitely without proper parliamentary oversight, accountability and scrutiny, and is doing his best to dial Parliament down to one giant rubber-stamping machine. And when the giant rubber-stamping machine refuses to rubber stamp, he simply looks for a way to go around it and then blame the opposition.
Consider what happened just a few weeks ago. The government introduced a four-part omnibus bill which sought to amend four acts of Parliament, limit the reach of another and enact a new one. It would have revised the eligibility criteria of a $45-billion government program, granted sweeping powers to ministers of the Crown to revise judicial time limits; permitted the cross-platform sharing of personal information from one agency of government to unspecified others; modified the application criteria for another $60-billion government program; and instituted criminal penalties for offences which were brushed off only a few weeks earlier.
Yet, when Pablo Rodriguez introduced this bill in the House of Commons, here’s what he said:
Mr. Speaker, there have been discussions among the parties and I hope there is agreement to proceed in the following manner. I move: That, pursuant to the order adopted on April 20, 2020, Bill C-17, an act respecting additional COVID-19 measures, be disposed of as follows: a. the bill be ordered for consideration at the second reading later this day; b. when the house begins debates on the motion for second reading of the bill, two members of each recognized party and a member of the Green Party may speak to the said motion for not more than 20 minutes, followed by 10 minutes for questions and comments, provided that members may be permitted to split their time with another member; and, at the conclusion of the time provided for the debate or when no member rises to speak, whichever is earlier, all questions necessary to dispose of the second reading stage of the bill shall be put without further debate or amendment, provided that, if a recorded division is requested, it shall not be deferred; and c. if the bill is adopted at second reading, it shall be referred to a committee of the whole, deemed considered in committee of the whole, deemed reported without amendment, deemed concurred in at report stage [on division], and deemed read a third time and passed [on division].
Colleagues, this is unbelievable. He basically wanted to deem Parliament out of existence. All of this was supposed to breeze through Parliament with a wink and a nod. So Andrew Scheer said no, we will not just rubber stamp this. But because we recognize it is important, we are prepared to sit tomorrow and the next day and the next day, in order to get the work done. The government refused and then blamed the opposition for obstructing their plans. Instead, they decided to abandon Bill C-17 on the Order Paper and are now telling us that they are going to find another way to accomplish what the bill was going to do.
Colleagues, this is nothing but arrogance on the part of the government. Bill C-17 would have been law today if the government would have been willing to get back to work. Instead, Canadians wait to see what creative scheme the government will dream up in order to sidestep accountability and parliamentary procedure.
This is unacceptable. Many of the changes introduced in Bill C-17 are critically needed, starting with the amendments to the Income Tax Act that would have revised the eligibility criteria for the Canada Emergency Wage Subsidy. The problem is they don’t go far enough. And by cutting Parliament out of the process, the government is eliminating the essential role that debate plays in the formulation of public policy, where problems are uncovered and rectified prior to implementation, rather than shutting the gate after the horses have left the barn.
This leaves us with policy where the government has made a few changes but left the biggest problems unresolved. For example, with the Canada Emergency Wage Subsidy, businesses that pay their employees in dividends have been shut out of the program. This is a major problem for small, family-run businesses and needs to be changed.
Second, if a business has not had a 30% drop in revenue, they don’t qualify for the program. It doesn’t matter if their revenue dropped 29.995%. Until they hit the magic 30% number, there is no help for them. This is a significant shortcoming, because although it may surprise some people, businesses don’t typically have a 30% profit margin to work with. I know all the socialists in the world think that business owners are just stealing money from the working class and stuffing it all in their pockets, but the economic reality is quite different.
In 2012, the average net profit margin for small businesses was 7.1%. For medium-sized businesses it was only 3.7%. So what the government is saying to businesses which have less than a 30% decline in revenue is, we may just have eliminated your customer base for 90 days, but we’d like you still to keep paying your employees and keep your business running, even though you’re digging a deeper and deeper debt hole every month.
How many small- and medium-sized businesses can afford that? Especially when they know that once the pandemic is over, business is not necessarily going to bounce back overnight. They could very well be running losses for months — possibly years — as volumes ramp back up and the economy gets back on its feet.
If the government was willing to listen to Canadians and to their fellow parliamentarians, it would quickly find that the necessary fixes are not complicated. But for some reason the government has a tin ear when it comes to economic realities.
The program is clearly not performing like it was expected to, and the fact that the government had to scale back the anticipated cost from $73 billion to $45 billion is proof of this.
Colleagues, this is the only government I have ever seen that is so incompetent that it has a problem giving money away.
Bill C-17 was supposed to amend the Income Tax Act and the Children’s Special Allowances Act so that the Canada Revenue Agency could share information with other government departments in order to facilitate a one-time payment to persons with disabilities. Nobody was opposed to that. The government could have split it off into separate legislation, and it would have sailed through both houses of Parliament with unanimous support. But here’s the thing: If you had a chance to look at the bill before it was shelved by the government, you may have noticed that nowhere was it asking for Parliament to approve this payment to persons with disabilities; it was only asking for approval to allow the CRA to share the information about who would receive the payment.
That meant Parliament would have no opportunity to scrutinize it. If Parliament had been given the opportunity to do so, it might have questioned why the government is not being a little more targeted in their spending to make sure the money is received by those who need it and not by those who don’t need it.
As it currently stands, the plan will give everyone who qualifies for a disability tax credit a one-time tax-free payment of up to $600, regardless of their annual income; it doesn’t matter if you are living on $18,000 or $218,000 a year, you will get the tax-free payment if you are a certificate holder of a disability tax credit.
It gets worse. There are 2.7 million people with severe or very severe disabilities in Canada, and less than half of them will qualify for the tax credit. So this payment will send $600 cheques to wealthy people who don’t need it, while not sending support to the poorest and most vulnerable in our society. Something is wrong with this picture, but there’s nothing we can do about it because the government has decided to circumvent Parliament and find another way to make it happen.
This is the same mind-boggling approach that the government is using to provide a tax-free payment to everyone who qualifies for Old Age Security. Normally, the Old Age Security program is income-tested so that high-income earners don’t benefit from it, but government has decided that we are going to ignore the income test and give a $300 tax-free payment to 6.5 million seniors, regardless of their annual income.
According to the Canada Revenue Agency’s income statistics, this means that over $166 million will be sent to Canadians earning more than $80,000 a year, and more than $41 million will be sent to seniors earning more than that $150,000 a year.
Am I the only one who has a problem with that?
We’re in the midst of an economic crisis, and the government is tossing millions of dollars around indiscriminately to people who don’t need it. Yet, they only gave $8 million to support the Kids Help Phone; $29 million to help Indigenous women and girls fleeing violence; and $50 million to support women’s shelters and sexual assault centres.
It defies logic, but this is the way the Liberal government works.
Colleagues, Bill C-17 would have created penalties for anyone who defrauded the CERB program. This makes sense. Taxpayers should never be asked to subsidize someone who is able to work and yet, when work is available, they refuse to accept it. Anyone who cheats in order to receive a benefit they are not entitled to should be held accountable. There’s nothing peculiar about that, but what is peculiar is why the government didn’t realize that in the first place.
Only a few weeks ago, federal employees working on CERB applications were instructed to ignore potential cases of cheating. This was despite the fact that there were already widespread reports of fraud.
When he was asked about it, the Prime Minister simply brushed it off, suggesting that they would catch up with the cheats when it was more convenient. It’s a bit like announcing you’ve left the doors open to the bank vault and then trying to reassure your shareholders that if anyone steals something, you’ll follow up on it later. It’s not very smart or reassuring.
There are certain kinds of people who will take advantage of a situation like that, and some of these people may be smart enough to cover their tracks so that the government will not be able to track them down later and will not be able to recover the money.
So now the Prime Minister suddenly wants to slam the door shut that he insisted earlier had to be left open. It’s like he just found out there is a threat from organized crime, so now he has to act quickly.
And yet, the Canada Revenue Agency has been aware of this threat for some time. In May, CRA officials told the Standing Senate Committee on National Finance that they had put systems in place to flag signs of potentially fraudulent activity, including numeric bank accounts with consecutive numbering. Apparently, consecutive-numbered bank accounts are a red flag for everyone except the Prime Minister. Instead of taking early action to insist that such fraud would not be tolerated, he just shrugged it off, saying the following:
Getting that help to the 99 per cent of Canadians who needed it quickly and rapidly — even if it meant accepting that one or two per cent might make fraudulent claims — was the choice that we gladly made.
Mr. Prime Minister, 2% of $60 billion is $1.2 billion, and if you are ambivalent about that, then perhaps it’s time for you to find a different calling in life.
Colleagues, make no mistake about it; Parliament has been sidelined by this government, and the bill before us gives ample evidence of that fact by what is not in the bill rather than what is in the bill. The payment to disabled persons is not in it, so Parliament does not get to examine the disability payment. The payment to seniors is not in it, so Parliament does not get to examine that either.
The government has promised $453 million in support for Canada’s farmers, food businesses and food supply, yet only $15 million is included in Bill C-19. There’s another $113 million that was in the supplementary estimates as a statutory expenditure, so that leaves $326 million still missing in action.
The government promised $29 million for protecting and supporting Indigenous women and girls fleeing violence. None of it is included in this supply bill. The total amount is still outstanding.
The government promised $3 billion to the provinces in order to top-up the wages of essential workers during the pandemic. Once again, the Parliamentary Budget Officer has noted that the total amount remains outstanding; not a single dollar has been appropriated to date.
On Tuesday, the Minister of Finance was here in the chamber, and he refused to give us any information on the state of the nation’s finances. Yesterday, I wrote to him, as he suggested I do, and asked again for the information, noting that we should be provided that information before we voted on this bill today. I sent him the same questions I asked in this chamber: How much is the debt of the Government of Canada, including Crown corporations? Please provide us with a breakdown, in percentage, of the creditors: Bank of Canada, Canadian entities and individuals, and foreign entities and individuals. For foreign creditors, please provide breakdown by country or region, if available.
Why would the Finance Minister know that?
Which part of the debt is for a five-year term or longer? How many corporations have applied for the Large Employer Emergency Financing Facility?
The minister’s reply was the same as it was in this chamber: It was the sound of crickets.
Colleagues, it is the height of arrogance for the Minister of Finance to ask parliamentarians to approve additional spending that will undoubtedly increase our national debt when he is either unable or unwilling to provide us with information necessary to make that decision in an informed and responsible manner. If a board of directors of any large corporation made financial decisions in this manner, I have no doubt they would be in breach of their fiduciary duties. And yet, this is exactly what the government expects of this chamber.
Colleagues, this is not acceptable. I find it difficult to understand those who suggest we should just give the government a pass.
Yesterday, our colleague Senator Woo asked Senator Martin what level of deficit the Conservative opposition would be comfortable with. He seemed to be suggesting that we were being a bit too hard on the government.
Well, Senator Woo, when the Finance Minister won’t give us the basic information about the state of the nation’s finances, how on earth is anyone supposed to be able to determine what is an acceptable level of overspending?
It’s too bad the senator was not as enthusiastic about asking Minister Morneau about the deficit as he was in asking Senator Martin.
Colleagues, the Conservative caucus in the Senate will not attempt to defeat Bill C-19, even though it is far from perfect. The funding that it provides is necessary to continue the uninterrupted delivery of the government programs and services that Canadians rely on.
However, we remain deeply concerned about the Prime Minister’s dismissive attitude toward the role of Parliament and the indifference he displays about the need for proper oversight and accountability.
He refuses to provide critical information on where we are, and he clearly has no roadmap on how to navigate the nation out of the debt he is racking up.
We are concerned not just for the state of the nation today but also for the fiscal challenges that will be inherited by our children, grandchildren and great-grandchildren.
I need not remind this chamber that, even before the pandemic, the Parliamentary Budget Officer warned repeatedly that provincial and territorial debt was already unsustainable.
It doesn’t matter what level of government we are talking about — there is only one taxpayer. And those taxpayers are currently carrying record levels of household debt along with alarming levels of ballooning government debt.
Factor into this the disturbing reality that the size of the workforce is diminishing relative to the size of our growing senior population and you are only beginning to get a glimpse of the fiscal challenges that lie ahead.
Colleagues, we are in the midst of a national crisis unlike any we have seen in our lifetime, and the decisions that are being made by the government during this time will reverberate for decades.
Today, I am calling on the Prime Minister to put aside his petty politics and start working collegially with his fellow parliamentarians.
This is not the time to restrict the sitting of Parliament and strip it of its power to consider debate and amend legislation proposed by a minority government. This, colleagues, is the time to work together to ensure a bright and sustainable future, not only for our generation, but for generations to come.
Senator Gold, do you have a question?
Will the senator take a question?
Will you take a question?
Certainly.
Thank you for that speech. Senator, you focused very much of your attention on matters that are not actually before us — Bill C-17 and others — and focused very little on the bill before us. The government does appreciate your support in passing it, of course, as do Canadians. But you focused a lot of your remarks on this government’s approach to the sitting of Parliament during this pandemic crisis.
As members of this chamber know, the House of Lords has moved to a hybrid model earlier this month — the House of Lords, the Westminster system which is so often invoked in this chamber and often as a reason for maintaining the status quo.
Senator Plett, why do you oppose the development of a hybrid or virtual Parliament so that Parliament can sit regularly during this pandemic?
Senator Gold, finally you get to ask me a question. I’ll try to give you the same kind of an answer. With that, let me sit down.
Senator Gold, every one of us here has been on Zoom calls and on Teams calls. People live in different parts of this vast, wonderful nation. We all have intermittent internet service. We have it right now today, right in here. All morning we’ve had it; all day yesterday we’ve had it. Different parts of the country are different — Senator Patterson, who lives in Nunavut, I’m sure Senator Anderson, and even myself living outside of Winnipeg — and we want to do the nation’s business? The other day the minister, on a social call or a finance call, I think, got cut out. The minister couldn’t answer the questions.
This is the kind of a sitting that would be just great for the government because once we can’t hear each other, they will just say, “well, nobody opposed it, so let’s move it through.”
Senator Gold, we are sitting here very reasonably. We are taking care; we are testing. I don’t think we have an issue here. That is what the Conservative opposition has been campaigning for.
We need to give proper oversight. We cannot give proper oversight sitting in our basements and our offices. We cannot talk to our colleagues. We cannot have our staff there. There are a million reasons other than the fact that we have poor internet service that that should never work — will never work — not in your time or my time. This is where we should be. People that don’t want to be here — there are many people who cannot be here today that would love to be here. Members of our caucus certainly would love to be here, but they cannot. There are members of all the other caucuses and other groups that would love to be here.
My problem is for the ones that don’t want to be here. They should go into a different line of work. This is where the nation’s business has been done for 153 years. It has served us well. I’m surprised how the government wants to look at whatever suits them, emulate and do what they do where it suits them, but not where it doesn’t suit them. That’s what this is.
The House of Lords has not proven that that is an effective system yet. So let’s wait. Let’s get back to Parliament. Let’s do our job. And if that works, fine. Let’s look at that down the road. Now is not the time.
My question to you was why you would oppose a hybrid system that includes the safe presence of members in the chamber but also the opportunity for those who cannot attend because of health or public health considerations to attend virtually. For so long as public health concerns require some measure of physical distancing to protect ourselves and the staff, a hybrid sitting of this chamber is the only safe alternative.
Do I take it from your resistance, Senator Plett, that you do not believe that physical distancing reduces the risk of the transmission of the virus?
First of all, that’s a very unfair statement. Absolutely I believe that physical distancing is important. If I’m never going to be close to you, I have no chance of giving you the flu, if I have the flu, or any other sickness that I have. That would apply for any and all.
We are at the tail end, and, yes, there may be a second wave. We are not sure that there’s a second wave. There may be a second wave. But in my opinion — and it’s one man’s opinion — we are at the tail end of it, and yet we are preparing for a possible September hybrid sitting.
Well, let’s rather work toward beating this thing before the end of September. Why would we now already assume that at the end of September we’re going to have to do this? This is the move of a government that does not want to be in Ottawa in Parliament, when they are preparing for a sitting that we all hope will never be necessary.
Will Senator Plett take a question?
Certainly.
The House of Commons, as they looked at the possibility of a virtual sitting there, just recently completed a report only a few weeks ago. I was just dealing with the issue of staff and how many staff may be required to do a virtual sitting.
I was wondering if you were aware, Senator Plett, that in that House of Commons report, they found that actually any type of virtual sitting, including a hybrid, required twice the number of staff that it required to facilitate that virtual sitting as a regular sitting of Parliament.
Thank you, Senator Batters. I have not read that report, but I certainly thank you for that. I know that even in our own committee meetings, I am being told regularly — I am chair of the LTVP Subcommittee — how many staff are required simply to have a virtual sitting of that committee. So I can only imagine the amount of staff required to have any type of hybrid or virtual sitting. It would obviously be magnified by many times. Thank you.
I just wanted to follow up. My thoughts were following up with Senator Gold’s questions and repeating the “refusing to return to work” phrase that’s being used, for parliamentarians refusing to return to work. In some aspects, of course, we can debate that I don’t think we ever left work, but the work you’re referring to is sitting in the chamber and working together. That is always something I’m trying to clarify.
This morning, I think I heard you say that it’s not necessarily about what we look like, what the setting looks like, but you’re aware that there are actually parliamentarians who don’t want to come to work. I think that’s the term I heard you use. Is that correct? They don’t want to be here?
Well, senator, I don’t know that I said that, but there have been senators who have sent emails saying, “I will not come to work unless this and this and this happens.” I am firmly of the opinion that if we have any type of a sitting — even this one could have been considered — and if we have a testing mechanism, which we will get and they are still improving the method, every senator gets tested before they come in here. I don’t want to come in here if I have the virus, and I don’t want anyone else to either.
But for us to simply say, “I will not come because of” whatever reason, that is what we are being paid to do, senator. You’re absolutely right; many of us have never left work. Over the last months, I have probably averaged five, six or seven hours a day on Zoom calls, all at different times of the day. It’s much more tedious, actually, than being here because we come in here at 1:30 p.m. or 2 p.m. and we rise at the end, which may be, as it was yesterday, at 9:30 p.m. and sometimes at midnight, if there are disagreeable senators who insist on seeing the clock and these types of things. They create longer sittings, and I understand that, but we have a specific set time to work.
Without question, I think it’s more difficult for me to be in my home office. Even if we dare to go to our cottages and do what the Prime Minister has been doing, spending a lot of time at our cottages, for us to be there and do it is, quite frankly, as difficult or even more so than being here.
I respect every senator who has a fear. I really do. Maybe I don’t have enough of fear and I should have more. I want to respect people who feel that, but I think we need to perfect our testing system and then we wouldn’t have this problem.
Then would you not think it would be fair game for September, honourable senator, to look at the options out there in line with what we’re hearing from the WHO and from our medical officers, and some realities of possible spikes? We’re looking at a hybrid model and others. I’m trying to understand and respect what you see as the solution for September 22 at this moment.
Well, in all fairness, senator, I think I just answered that question. I think that we need to perfect our testing system. Surely with the people we have working on this, by September we should have that perfected.
You’re saying there may be a spike. The WHO is saying there may be a spike. We have also seen some of the other decisions that the WHO has made. We hear one day wearing masks are of no value, and the next day you have to wear masks. We heard the Prime Minister say closing borders was racist, and then the next day he closes the borders. We need to have some consistency here, and I’m willing to listen.
But no, I do not believe that a hybrid or, indeed, a virtual sitting is the way to go if we don’t need to go that route.
Would my honourable colleague agree to take another question?
Yes.
I’d like to ask some questions about Bill C-19. I didn’t hear much about this bill in your speech. I did hear you talk about all kinds of missing items in this bill that you claim haven’t been properly funded.
If we were to fund all of the items you identified in your speech on the supplementary estimates, how many billions of dollars do you think we’d add to our deficit?
In fairness, senator, the day that the Minister of Finance can tell us what the deficit is to date, then I will answer a question on what I think the deficit would be. But until he either has the wherewithal with his 800 staff to answer the question he asked me the other day — and you were here, senator. He sat in this chamber and said if I had only contacted his office, he would have been better prepared, and I should have contacted his office. I’ve done that. I’m waiting for an answer.
The day he gives me the answer, I will add that to this deficit because I don’t know what the deficit is today; he doesn’t know what the deficit is today.
I’m talking about the costs, the spending for the items you identified as lacking funding.
Let me repeat what I said: Send that to my office, and I will have my staff look at it and maybe we’ll get back to you.
Leader of the Opposition, would you take another question?
Yes.
Senator Plett, I can’t help but notice a major contradiction between what you and Senator Housakos have been saying since yesterday. You’re saying that we didn’t sit often enough, and I completely agree. I would have liked for there to have been more sittings in June. I think our role is to meet together.
You said and continue to repeat that we aren’t sitting enough. A hybrid solution has been presented that would enable you, Senator Plett, and those who are able to be here to participate, while also giving our colleagues who have been deprived of that ability the same privilege, colleagues who may be older or have health problems. First, it would be nice to do that for these senators. It’s important to find an electronic solution that would enable them to participate. However, it’s also a matter of regional representation, which is very important.
That’s why I can’t understand how you can be telling everyone that we need to have more sittings and that the government is preventing us from sitting when the Senate could’ve held more sittings in June. You’re also saying that it’s impossible to come up with a solution that would enable a larger number of us to be here, not only for those who can be here, but also for those who cannot because of medical reasons.
In my opinion, that is a contradictory position you have and it shows that, at the end of day, you’re not really looking for a solution to this problem. Saying that we don’t need to come up with a solution and that we should wait until the end of September to see what happens means that we will end up in the same position. Technically, we won’t have what we need to get started and there still won’t be enough of us to sit and do our work. Why this contradiction?
You happen to see a contradiction in something that I actually consider being fairly consistent. I have promoted all along, senator, that we sit. I have made every effort to come here for each of the emergency sessions we have had. I have been here. There were restrictions placed on all of us as to why there weren’t more people here, in my opinion.
Senator, we have had two world wars. We had the Spanish flu that killed between 50 and 100 million people around the world, and Parliament always sat. They always sat through those times. We need to socially distance, which is what we are doing here today. This has worked quite fine. The government is ramming through their legislation the way they like to do and, possibly, like any other government would do. I have my own opinions on that. I believe that we have done a remarkable job here this last week or two, and so I’m not sure where my contradiction is. I have promoted this all along.
Honourable senators, we always allow a tremendous amount of latitude when senators are asking questions. We are in a debating chamber, after all. But I think we should try to make an effort to have some nexus between the questions and the speech that the senator gave.
I will wrap up quickly and I will be more specific. What difference does it make to you, Senator Plett, if some of our colleagues join us virtually in this sitting while you and 30 or so other senators are here in person? Being here in person means we can avoid technical difficulties. If we have a government representative answering, then he or she is answering. Why does it bother you if 20 or so people are online while you’re here? That’s the part I don’t understand.
With all respect, senator, that does not give everybody equal access to the debate and equal access to questions, because they may or may not get cut off halfway through their question. Senator Batters has just told us the amount of staff that is required. Senator I don’t know what committees you’re on, but I’m sure you have done a lot of Zoom calls and I’m sure you’ve occasionally been knocked out of a call because of a bad connection. That would still happen whether it’s a hybrid or virtual sitting. It would be fewer people who would be disenfranchised, but there would still be people who would be disenfranchised, and with their parliamentary privilege taken away from them.
Senator Plett, your speech is very interesting. One of the items you put into your speech was about not being in Ottawa, and you were speaking about the Prime Minister not wanting to be in Ottawa, or something of that kind, and doing all of his work from Rideau Cottage. Could you tell us where the Rideau Cottage is exactly?
Well, if you want me to give you the exact address, no, I could not, but it is where Government House is. I did not say he didn’t want to be in Ottawa. I said he didn’t want to be in Parliament.
Exactly.
He wants to be at Rideau Cottage and Harrington Lake. That is where he wants to be. I’m sure he is in Ottawa more days because he’s out at his cottage. I didn’t name it that. It is called his cottage, and I call my place my cottage.
For the record, the French equivalent of “Rideau Cottage” is “Bungalow Rideau.”
Wouldn’t you think there is a little nuance here?
Well, senator, if you would like, I will start asking: Why is the Prime Minister at his bungalow when he should be on the Hill? Whether it’s bungalow or cottage, I think he should be on the Hill doing the nation’s business here, like everybody else. Every other world leader has been at work, and he chooses to be at home. He started it, in all fairness, because his wife had the virus. I think everyone in the country appreciated that he would isolate for those two weeks. But Sophie Grégoire Trudeau had long been away from that cottage and is spending time at Harrington Lake, something the Prime Minister tells us. Yet he is still spending his time at his bungalow.
Would Senator Plett take a question?
Absolutely.
Senator, the way things are going, it looks like you’re auditioning for the government leader’s job.
Senator Plett, since we are on the topic of the commitment that the government has — or a lack thereof — to Parliament, can you tell us what message, because I think you’re pretty much bang-on in 95% of what you’re saying, but you’re a little bit off on Mr. Trudeau’s whereabouts. He has found time to leave his wonderful bungalow, cottage, or whatever we want to call it. He finds time to come to Parliament Hill, not to the House, but to enjoy rallies, for example. He finds time to criss-cross the country. He was in Chelsea a few days ago giving campaign-style speeches, visiting facilities and meeting the public, industrial leaders and commercial leaders.
Senator Plett, not just as a senator but as a Canadian — we as parliamentarians expect the banking industry to send their employees to work. We expect pharmacies to send their employees to work. We expect grocery stores to be operating. We have meat plants operating. We have the agricultural industry operating. We have hospitals — and I know them because my wife is there 15 hours a day, seven days a week — what message is it sending when the head of government doesn’t have time to go to the House of Commons but he’s criss-crossing the country on election-style junkets?
Well, thank you, Senator Housakos, and I’m sorry if I wasn’t a little more explicit in my comments on that. I have it on good authority that one day when he did come to the Hill, on the back of one of his vehicles were two dirt bikes. I’m not sure where he was going after he did run in and out of West Block, but you’re absolutely right. He has taken a lot of time.
I should stop accusing him of just staying at his bungalow, because he is indeed going out to protests, and he is indeed going out and campaigning as he sees fit.
Again, my apologies to the Prime Minister for suggesting he’s not out there campaigning when he is.
Honourable senators, I was listening to Senator Plett, and I was thinking, thank goodness I’m not saying the same thing as Senator Plett. I have some new material, so bear with me.
I’m going to give you some numbers first — and I know you won’t be surprised to hear that — and talk about supplementary estimates, and relate it back to Minister Duclos and what he was saying when he was in the chamber on Tuesday.
The supplementary estimates include $87 billion in new spending, of which, $6 billion is voted and $81 billion is statutory. We focused on the $6 billion in the Finance Committee. We heard from six organizations that are responsible for about $2.7 billion of the $6 billion, so we looked at about 44% of the total voted amount requested.
We had one committee hearing of three hours. Of course, it was over Zoom, so it wasn’t as thorough as hearings in previous years. The time allotted to each senator for questions was significantly less than in previous years. The chair, since we were meeting by Zoom, kept us very tightly controlled. There are challenges that remain with the virtual meetings; not everybody has good internet access. The technology is not perfected yet, so there are challenges.
I also want to remind honourable senators that when we studied the $6 billion, this was the first money that we studied this year, because we didn’t study Main Estimates, and we didn’t study either of the interim supply bills, one of which we passed yesterday. We had limited information with which to study Supplementary Estimates (A). What I find when we study money bills is that we build a foundation. What we learn when we study the previous money bill helps us to study and to ask questions on the next one.
As I indicated, we met for three hours and we held hearings. We had six organizations testifying: Innovation, Science and Economic Development Canada; Indigenous Services Canada; Department of National Defence; Public Services and Procurement Canada; Public Health Agency of Canada; and Canadian Air Transport Security Authority.
Now, while we held one meeting on Supplementary Estimates (A), it was clearly insufficient. We didn’t have an opportunity to ask anything about the $80 billion in statutory funding, because we are sometimes given an opportunity to ask questions on statutory funding.
So this year we held one meeting with six organizations. Last year, when we did Supplementary Estimates (A), we had two meetings with eight organizations. The year before that we held three meetings with 10 organizations on Supplementary Estimates (A). I felt, by the time we finished, that we really hadn’t done what I considered to be a good, thorough job.
I know some people have put forward the argument that $81 billion of the funding in this year’s Supplementary Estimates (A) is statutory and therefore has been approved by other legislation. I’d like to say that these are new programs that were established a few months ago because they’re COVID-19 related and in response to the pandemic. I think parliamentarians should have been provided sufficient time to study their costs.
In fact, if you look at the full $87 billion in the supply bill, you will see that almost $80 billion was approved by the Public Health Events of National Concern Payments Act, which was enacted when we approved Bill C-13 in March. So we didn’t have an opportunity to discuss those items at all.
When I spoke last, I was talking about some arithmetic. I’ve got to go back to my little arithmetic lesson and just remind you that Main Estimates for this year is $308 billion, and supplementary estimates is $87 billion, so the government’s spending plan thus far is $395 billion. When Minister Duclos was here the other day, he said $26 billion of that amount remains to be approved by Parliament, and we may get a chance to look at that in the fall. We’re looking at $6 billion today.
After today, $369 billion will have been approved for the government to spend this year, and the Finance Committee has looked at $6 billion of it. Just think about that: $369 billion, we’ve studied $6 billion, and it was only for three hours. That’s not good parliamentary oversight.
A similar thing happened in the House of Commons. Normally the House of Commons, like the Senate, spends a significant amount of time studying and analyzing government spending plans in various committees and, like us, calling witnesses to testify, but not so for these Supplementary Estimates (A). The other place held a four-hour Committee of the Whole to discuss Supplementary Estimates (A). As the Parliamentary Budget Officer said in his report:
It will be difficult for parliamentarians to perform their critical role of properly scrutinising proposed Government spending in the four-hour window.
That applies to us. I don’t think we performed the critical role of properly scrutinizing proposed government spending this year. In fact, the money has been spent and we haven’t scrutinized it.
As I said, we heard from six organizations, but there were others that have substantial amounts of money in Supplementary Estimates (A) that I would have liked to have heard from, but time is short. That includes Crown-Indigenous Relations and Northern Affairs. They requested $879 million, which is a substantial amount.
I would have liked to have heard from the Department of Finance officials. They requested $1.7 billion. Probably at the top of my list was CMHC, because they requested $3 billion for the Canada Emergency Commercial Rent Assistance for small businesses. I think that Senator Plett mentioned that this morning. CMHC is requesting the second-largest amount after Employment and Social Development Canada. And Employment and Social Development Canada is the one that received the budgets for almost all of the COVID-19 programs, like CERB and those types of programs. So CMHC was the second largest, I would have been interested in hearing from them. I guess we’ll hear from them when we do our COVID study.
For me, CMHC is of particular interest, not only because of the $3 billion included in Supplementary Estimates (A) but because of their involvement in the housing market. CMHC insures mortgages and are involved in other significant financial activities that are not reflected in Supplementary Estimates (A).
For example, the mortgage market in Canada is $1.6 trillion, and it appears that CMHC’s insurance threshold is approaching 46% of the mortgage market, so there is the ongoing question as to the exposure of CMHC and the impact it could have on the government’s debt and deficit. The issue of CMHC and its involvement in mortgages and risk assessment has been raised at previous meetings of the Finance Committee, mostly in anticipation of a potential recession, but the pandemic is something we never envisioned. I don’t know what impact CMHC will have on the government’s debt and deficit.
As I’m sure everybody knows, CMHC is a large Crown corporation with a mandate to promote the construction of new houses, the modernization and repair of existing houses and the improvement of housing and living conditions.
Because CMHC is a Crown corporation, it borrows under what we call the Crown Borrowing Program. It also insures mortgages, holds mortgages and it carries out a number of programs. Although they did not testify before our Senate Finance Committee, they did testify before the House of Commons Finance Committee since the beginning of the pandemic and provided some insightful testimony.
I usually look at the Finance meetings over at the House of Commons. Initially just the transcripts were available, but you can get on and watch the actual hearing. For anyone who’s interested, it’s a good source of information.
So at that meeting over at the House of Commons Finance Committee, Evan Siddall, President and CEO of CMHC, had some interesting testimony. He told committee members, “Canadian consumers will face previously unheard-of levels of debt as households confront shrinking incomes and mounting bills in the months to come.”
So his testimony was a while back: it was last month, or might have been even six weeks. What he said is coming true.
He said at the time, “One in eight households with a mortgage has deferred their payments.” He said this “could increase to one in five if the economy does not recover.” He added that:
. . . higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s longer-term financial stability.
Governor Poloz appeared before our Finance Committee at the Senate after I had read that testimony that Evan Siddall had provided. So I asked him about that statement, the cause for concern for Canada’s long-term financial stability. I don’t know if I misread him or not, but I felt like he downplayed it. Maybe it’s not a concern, but it seems to me it should be.
Since CMHC is the underwriter, and this is Evan Siddall speaking again, of the majority of insured mortgages in Canada, “CMHC will be on the hook for paying off banks’ bad mortgages,” which he estimates could cost $9 billion. If that’s the case, I expect to see those numbers roll into the government’s deficit.
In any event, CMHC will testify as part of our COVID-19 study in the fall, but a review of CMHC’s annual report and the Bank of Canada’s balance sheet will give you some idea of CMHC’s activities during COVID-19.
I’ve always been interested in CMHC. Their year-end is December 31 and they usually release their annual report the first week in May, so I was looking for it. They did release it. I thought it would be delayed. I thought there might be something in there on the COVID-19 programs, but there was very little. They did have what you call a “subsequent event” note, and it says:
As part of Canada’s COVID-19 Economic Response Plan, on 16 March 2020, the Government of Canada announced it is launching an Insured Mortgage Purchase Program (IMPP), whereby, the Government will purchase up to $50 billion of insured mortgage pools through CMHC.
Then it says:
The purchase of insured mortgage pools under the IMPP will be financed through the Crown Borrowing Program.
That links back to the question I’m always raising. The Crown borrowing program — there’s so much borrowing in that, and we seem to forget about it when we talk about the government’s debt.
I’m going to move on to the fiscal update. Many economists; politicians; think tanks; and others, including the Parliamentary Budget Officer, the former Parliamentary Budget Officer, parliamentarians and the general population have discussed a need for a fiscal update. The Prime Minister has finally made a commitment to provide a “fiscal snapshot” — that’s what he called it — on July 8.
The past three months have been very difficult for all Canadians. For those of us tracking the unprecedented level of spending; the unprecedented level of borrowing; the activities of the Bank of Canada; the activities of the government; and the government’s Crown corporations, including CMHC, EDC and Farm Credit Canada, it’s almost been impossible to get a handle on what is happening financially within government. Financial information has always been limited or, as Senator Harder said the other day, there’s reams of it, but you have to bring it together. It’s always a challenge to figure out what is actually happening, more so in the past three months.
So we do need a fiscal update to understand where we are financially.
The government says it has been transparent about its spending, but it hasn’t. We can’t even tell what overall spending has been so far, let alone projections for the future, or what revenues the government has received so far, what guarantees have been honoured and what is happening in the Crown corporations.
The June 17 media advisory from the Department of Finance indicated that the minister will present an economic and fiscal snapshot on July 8. The advisory continues on to indicate that the snapshot will provide information on the current state of the economy and the Government of Canada’s response to support Canadians during the COVID pandemic.
I’ve never heard of a fiscal snapshot. I’m a professional accountant. Maybe it’s a new term and I’m dated in my terminology, but I’ve never heard of a fiscal snapshot.
Minister Morneau was asked about this at Question Period on Tuesday, and he said that while some assurances were given, we will have to wait until July 8 to see if people receive the information they are looking for.
The information definitely wasn’t received on Tuesday.
While the government has committed to an update, or a fiscal snapshot, next month, those of us interested in this information are left to try and, as I put it, figure it out on our own.
One of the areas I’m interested in is our market debt. This unprecedented level of spending is being financed by debt. It is not just the Department of Finance looking for debt financing; the Crown corporations are busy financing their COVID-19 spending programs with debt. These Crown corporations include the Business Development Bank of Canada, CMHC, the Export Development Corporation and Farm Credit Canada.
So I become quite frustrated when I hear or read articles that the government’s debt is approaching $1 trillion. Government exceeded this threshold a number of years ago. Consider this information in the government’s 2019 budget document last year — and this is taken right from the budget document. The Borrowing Authority Act approved:
. . . a maximum stock of outstanding government and Crown corporation market debt of $1,168 billion . . .
And that same budget document, which was released a year ago, projected that the outstanding government and Crown corporation market debt would reach $1,070 billion by March 31, 2020. So we’re already over a trillion dollars. That’s our market debt before the pandemic spending started. This $1,070 billion includes $754 billion in the Department of Finance and $316 billion in the Crown corporations.
For those who think that the $360 billion in debt in the Crown corporations is not government debt, let me assure you it most definitely is government debt.
According to Treasury Board — and it’s disclosed on the Government of Canada website — here’s what it says:
The Crown is ultimately fully liable and financially exposed for all actions and decisions by its agent corporation while the corporation is operating within its mandate. In other words, the corporation’s assets and liabilities are the assets and liabilities of the government.
So we know that outstanding debt was projected to be $1,070 billion at the end of March 2020. To determine what the government’s market debt is of today, I don’t know. You’d have to start going to various reference documents and try to put it together yourself.
One is the bi-weekly report on Canada’s COVID-19 emergency response. Every two weeks, they send out a report — usually early in the week — so we wait to see what’s in it. The sixth report indicates borrowings of $350 billion during the pandemic, but that includes not only new debt but the refinancing of existing debt.
I was trying to get it broken out, but we weren’t successful. We tried to contact the Department of Finance, but they were busy with the pandemic programs. I don’t know if that $350 billion includes the borrowing of the Crown corporations, so they left out their question.
Another source of information on the borrowings is the Bank of Canada’s weekly balance sheet. If you go on their website, you can track what’s happening with their balance sheet, and you can see that they are buying debt. Last week, the bank’s balance sheet shows, under the heading of the Government of Canada, treasury bills of $118 billion, Government of Canada bonds worth $152 billion and Canada Mortgage Bonds amounting to $7 billion.
When we’re looking at the debt, the Crown corporations and the government debt, we’re trying to match up the numbers, but they don’t really align. I guess we’ll have to wait till the Minister of Finance gets back to us.
This question remains unanswered: What is the total market debt of the government as of today? Like I said, I don’t know. But I do know that the government should be providing us with this financial information. We have no idea what the deficit is. We don’t know what the borrowings are. We’re looking to the Parliamentary Budget Officer, and he’s providing us numbers, but the numbers should come from the Minister of Finance.
I know that when officials from Department of Finance testified before our committee — this was a while back, and I had asked when we were getting a fiscal update — I did say, “We have this deficit number of $252 billion from the Parliamentary Budget Officer,” and the witness from the Department of Finance said something — I can’t remember the exact wording — but it was something that would indicate that’s the number from the Parliamentary Budget Officer, but the Department of Finance has access to more information.
It left me wondering whether the Parliamentary Budget Officer had gotten all the information he should have had when he projected his deficit.
As I said, we have to seek out information from various sources and try to put it together ourselves.
It’s not just the government that’s got a problem with debt; household debt is an issue too. We’ve been tracking household debt over the past three years, especially so since the pandemic, because household debt is very high to start with. Statistics Canada, on June 12, reported that household debt as a proportion of household disposable income rose during the first quarter of 2020. I’d expect it to rise further in the second quarter, as it was in the second quarter that the pandemic really took hold.
Prior to the pandemic, economists were saying that household debt was a key vulnerability to the Canadian economy. The International Monetary Fund has also expressed that same opinion in its reports. We met with representatives of the IMF a couple of years ago, and that was their big concern — the high household debt of Canadian consumers. It seems like Canadian consumers love debt.
Statistics Canada also told us that Canadians — and this is not the government — owe $2 trillion in debt. Of that, $1.5 trillion is mortgage debt, while the remaining $800 billion is consumer debt and non-mortgage loans.
One of the issues being tracked by the Bank of Canada is the number of people having trouble staying on top of their mortgages. Currently — this is the Bank of Canada saying this — the mortgage arrears rate is at slightly more than 0.2% and it is expected to increase once the payment deferral plans expire and people are required to start paying on their mortgages again.
The Bank of Canada says one out of every five home-owning households in Canada currently doesn’t have enough money to cover two months of expenses and almost one third doesn’t have enough to cover four months. Given the high level of debt held by Canadians, the deferral of mortgage payments and the high rate of unemployment, many Canadians will be facing a difficult and stressful summer and fall.
Before I move away from debt and start talking about funding for individual organizations, I wanted to read out something that the Parliamentary Budget Officer said when he testified before our committee. Senator Boehm had asked him a question on trust. Somewhere in the answer, the word “debt” was said. So, of course, when the Parliamentary Budget Officer responded to Senator Boehm, he got into borrowing and he said, “. . . I’m very, very concerned . . . providing . . . power together with all the other powers that you mentioned — borrowing almost without . . . limit . . . .”
What he’s talking about is Bill C-13. Part 8 sort of removes the current obligations from the minister for the current requirements to report on borrowing. It sort of lightens the load for him.
Mr. Giroux continued:
. . . borrowing almost without any limit, without any immediate oversight — in one person, it’s something that, in my opinion, is unprecedented in the current regime and in Canadian history. Even though speed is at a premium right now, it doesn’t mean that the minister should be allowed to act by himself or alone to create trusts by corporations and borrow billions of dollars, which is what Bill C-13 has given in terms of powers to either one minister or cabinet without oversight from Parliament.
That pretty well sums it up. We don’t know what the borrowing is. Ordinarily, when the budget comes down in March or February, whenever it comes down, right at the back of the budget book there is a section on borrowing. It provides all sorts of information on borrowing; it’s really quite interesting. But because we didn’t have a budget this year, we don’t have that information. So I’m using the budget book from a year ago. Bill C-13 removes a lot of obligation from the minister for reporting on the debt. We’re just in limbo now, waiting for the fiscal snapshot to see if we can get something out of that.
I have to remain hopeful July 8 will provide more information, but we’ll see. We only have to wait a couple more weeks.
I want to talk about some individual organizations. When we study supplementary supply, we look at what is included in the bill, but sometimes we give some thought as to funding we thought would be included. We’re looking for it, but it’s not there.
I would like to comment on one organization for which I thought funding would have been included but was not. That’s the additional funding that the Auditor General had requested. My colleague across the way asked a question of the Minister of Finance on that the other day. That dovetails nicely into my comments.
Over the past six months, as a bit of background, the House of Commons has approved three motions requiring additional audits to be undertaken by the Auditor General. The first is an audit of the $180 billion infrastructure program which is being delivered by 32 federal departments and agencies over a 12-year period. That’s going to be a big audit — $180 billion, 32 departments and organizations and over 12 years.
The second is an audit of the COVID-19 programs. The magnitude of this audit can be seen by reading the government’s bi-weekly reports on COVID-19. It includes all of those programs like CERB and the wage subsidy program — all the COVID-19 programs designed to help individuals and businesses. Of course, it includes government’s borrowing during the pandemic and all government programs associated with CMHC and other Crown corporations. That’s a massive undertaking for the new Auditor General.
The third is an audit of special warrants. I’m not so familiar. I would have thought that would not be a big audit, but it might turn into a big audit. The first two are definitely massive audits.
The interim Auditor General — before Ms. Hogan was appointed — testified before the House of Commons Finance Committee last month. He told the committee that audit work has been significantly reduced because of funding constraints. They were looking for additional funding. I thought it was $10.8 million, but I saw another figure later of $11.8 million. Anyway, it’s in the vicinity of $11 million.
Two weeks ago, the House of Commons Finance Committee unanimously passed a motion, including the MPs from the Liberal caucus, to provide the Auditor General with all the funding she needs to carry out her audits. The supplementary supply bill provided an opportunity to include the funding for the Auditor General, but I don’t see any funding in that supply bill.
From recent media reports, I understand she’s looking at the numbers now. It seems the government might give some funding. The problem I have with it is that, on the one hand, the government is giving the impression that it is being accountable and transparent by asking that the programs be audited or at least supporting that the programs be audited. On the other hand, they’re refusing to provide the resources to enable the Auditor General to do so.
Testimony was given by six organizations. I will comment on three of them. First, the Canadian Air Transport Security Authority, CATSA, is requesting $309 million for aviation security screening services. I have said before when I have spoken about the budget that you see an organization requesting funding, you can’t just look at it by itself. You have to see what has happened in the past and also take a look into the future.
For this particular request, I was looking back because I remembered something in last year’s budget implementation bill. Division 12 of Part 4 of the budget bill, Bill C-97, would dissolve CATSA and transfer all airport screening to a non-profit agency. This part of the Budget Implementation Act was carved out and referred to the Standing Senate Committee on Transport and Communications for study at that time. Their report dated June 6, 2019, expressed serious concerns about the changes proposed in the Budget Implementation Act. Those concerns are outlined in their report.
At our Finance Committee meeting last Thursday, the CEO of CATSA informed our committee that the federal privatization of airport security is delayed indefinitely due to the pandemic. Although this part of the Budget Implementation Act was referred last year to the Transport and Communications Committee for study, it does have financial implications for Canadian taxpayers and travellers. I suggest our Finance Committee consider studying the matter.
The Department of Indigenous Services was another one of the six departments testifying at our committee meeting last week. They had the largest voted item, $468 million to strengthen the safety and well-being of First Nations children and their families. That $468 million would increase the program funding to $1.7 billion.
You have to go back and look at last year’s numbers, and those are comparable to last year’s numbers when the main supply provided $1.2 billion and supplemental supply provided another $600 million for a total allocation of $1.8 billion. That looks to be the range.
Therefore, if government is providing $1.7 billion or $1.8 billion each year to Indigenous children and their families, how will this impact the children and their families, and how will the department measure the impact? So we’re going back to the departmental results reports again.
A question on departmental documents was posed to departmental officials. Their departmental documents indicate that the department intends to measure the percentage of First Nation children on reserve in care, with the objective of decreasing these numbers. They will also determine the First Nation communities that run their own family and community well-being programs. Then they listed other performance indicators for other aspects of the program.
When you look at the performance indicators, they appear reasonable, but the targeted achievements have yet to be determined and won’t be determined until March 2021, which is almost in a year’s time, and the date to achieve the targets has yet to be determined, so that brings us way out.
This raises the question that the impact of these programs will not be known for several years, so it’s not possible to know whether these billion-dollar programs are achieving what the government wants them to achieve, and whether Indigenous families and their children are receiving the maximum benefit from that money.
The third department I’m going to comment on — and this is the last comment on a department — is National Defence, because this is a department in which I’ve always been interested. The largest voted item for the Department of National Defence is for the Joint Support Ship project in the amount of $585 million, and it’s for the first of two ships being constructed at the Seaspan Shipyards in Vancouver.
We were interested in knowing the total cost of the project and when it would be delivered, because this project is one of 333 projects in the government’s defence policy that was issued in 2017. That Defence policy spans 20 years and it references funding for Defence capital projects totalling $108 billion over the 20 years, so we usually ask questions on that program.
Officials told us that the estimated cost of the Joint Support Ship project is now $4.1 billion and this first ship is expected to be delivered in 2023. There is some concern about the cost of the project rising, and it’s in the Finance Committee’s report on Supplementary Estimates (A).
The committee has had an ongoing interest in capital projects of the Defence Department and last June we issued a report on defence procurement. Of particular interest was the management of the 333 projects. Since the release of the policy in 2017, the Finance Committee has been requesting financial and other information from the department in order to track the progress of the projects. Despite requests at every Finance Committee meeting attended by Defence officials since the release of the policy in 2017, the information has never been provided.
Similar information has been requested by the Parliamentary Budget Officer and he has yet to receive the information. He has indicated to the Finance Committee that he intends to issue a report on this matter once he receives the requested information, and we are awaiting that report.
Last week, there were several media reports about an internal audit recently posted to the department’s website that indicated lax oversight on military spending plans. The audit was critical of the department, indicating that the lack of monitoring within the department meant senior Defence officials were not receiving clear and accurate information about the state of the plan, and that there is no formal department-wide process to validate the policy initiatives and project performance information.
We don’t know if the department has a project management system or what other means they have to track its 333 capital projects. Suffice it to say that it appears the Defence Department may have a major problem in tracking its projects, and financial and other information requested by the Finance Committee has never been provided. The committee will be addressing this issue when we resume sitting in the fall. The issue is also addressed in our committee report on Supplementary Estimates (A).
My last comment on Supplementary Estimates (A) is more of a matter of interest. I should probably ask questions on it the next time the Finance Committee meets, but when you look at the supplementary estimates, down through the departments, some departments and organizations have the same description of a line item. I noticed that 25 departments and agencies had an item called “Contributions to employee benefits plans,” totalling $100 million. We have never studied this item, but the amounts budgeted ranged from $25,000 for the Department of Indigenous Services to $41 million for the Department of Public Works and Government Services. I can’t offer any explanation for the variations in dollar amounts among the departments and agencies. Suffice it to say that we should earmark that for study in our Finance Committee when we meet in the fall.
Before I sit down, I’d like to say a few words of thanks; first of all to Senator Gold, who is the sponsor of the bill. Thank you very much, Senator Gold, for your comments.
I would also like to thank my colleagues on the National Finance Committee for their excellent questions and also for their enthusiasm, which is very much appreciated.
And a special thank you to our chair, Senator Mockler, deputy chair, Senator Forest, and our third steering committee member, Senator Richards.
To our clerk, Ms. Fortin, and to our analysts, Mr. Smith and Mr. Pu, thank you.
And thank you to all the staff who worked very hard during this pandemic: translators and ISD staff under the direction of Mr. Vatcher. It takes a lot to have those Zoom hearings. And if I missed anyone, I apologize. A big thank you to everyone who worked on that.
I would like to add a thank you to my two staff: Ms. Valérie Wolfe, who has been working under very difficult conditions from home, with a very demanding boss; and also Ms. Julieta Uribe. Julieta has been with me for seven years. She’s my policy adviser and she’s leaving on July 3. She has seized another opportunity, and I think the fact that she’s been with me seven years speaks volumes. I wish her all the best.
Thank you again to my honourable colleagues for making the Finance Committee so successful. My last words are that we do not have parliamentary oversight. It is a big problem. Thank you.
I have a question for Senator Marshall.
By all means.
Senator Marshall, you lament the fact that National Finance has not spent enough time on the Supplementary Estimates (A). Why is that? The Main Estimates have been available since February. The reference was given to National Finance in early March. There has been time to do it. The mandate was given. Is there a reason why the committee did not take it upon itself to do the work that it was supposed to do, that you wanted to do?
What happened, Senator Woo, is that we all went home in the middle of March and there was really no way to meet. People were in lockdown. People were fearful. As soon as we were able to start meeting by Zoom, we started our meetings, and we’ve been focused on the COVID-19 expenditures.
I would think now that we will be up and running, and I’m hopeful that we will be studying the supplementary supply bill; the third one that comes in the fall.
However, it took a while to get organized and do the meetings. Technology is not the entire answer.
So I think the answer you’re giving is that the absence of the parliamentary oversight that you lament is due to reasons that were beyond the control of the committee, as you were saying. Perhaps you felt the technology was not sufficient, but the mandate was given for the committee and if it had chosen to meet, using the technology that was available, it could have examined the Main Estimates in the three months that has passed, since they were made available to National Finance; is that correct?
The government needed the money made available right away to start spending for the pandemic, so there was pressure there. Do we delay by studying? For myself, it’s like you’re between a rock and a hard place. It’s not good parliamentary oversight but you go along because government needed access to the money. They needed to spend the money.
That is not really the answer to the question. The question is that you complain that National Finance did not give sufficient time to study the Main Estimates, but the Main Estimates have been available, and should the Finance Committee had wanted to spend more time, it could have. I understand that the mitigating factor that you’ve put forward — which is a reasonable one — is that people were unaccustomed to technology and so on. I think that’s a reasonable explanation for why the Finance Committee has not given as much time to the study as it would have liked. Not because of, though — this is very important — some kind of wilful neglect on the part of any senators from any recognized group.
Let me ask you a different question. It’s in the same spirit as what Senator Harder was advocating for in his speech yesterday, to try to look at the bigger picture and ask questions about results, impacts and implications rather than simply trying to get the numbers to add up.
It has to do with your very strong focus on CMHC. You’re right; it’s a big organization with a large balance sheet, and its support for the housing sector is crucial to a major sector of our economy.
The line of your questioning and your comments might lead one to think that there’s some trouble in CMHC, that the problems in mortgages and the impending defaults of up to $8 or $9 billion, which you referred to, might be something that cannot be handled by CMHC. These are very serious insinuations. Perhaps they’re not what you are trying to express, but you know the balance sheet of CMHC very well. Maybe you could tell honourable senators and the Canadian public what you know about retained earnings at CMHC, what you know about the capital pool and the reserve pool, the Government of Canada’s equity on CMHC’s balance sheet and how that compares to any potential losses. And if, in fact, you feel that all of this is still not enough and that there’s a crisis coming, are you saying the premiums, essentially the fees charged by CMHC, have to go up?
Excuse me, Senator Marshall, but your time has expired. Are you asking for five minutes to answer the question?
Yes, please.
Is leave granted, honourable senators?
I thought you had listened to my speech, but now I’m not so sure.
I wasn’t reading big problems into CMHC. My issue is the availability of information and putting that information together so that we, as parliamentarians, and even the general public, can know what’s going on.
What’s happening, Senator Woo, is that I am looking at their annual report, I’m looking at their financial statements and I’m looking at changes that the government made to increase their borrowings, but I can’t tell how it all fits together. How does it all fit together? How will it to impact the government? That’s the point I’m making.
I just want the picture, and the picture is not being provided. The department or the Minister of Finance should be painting that for us, and we’re not going to get the picture until July 8. And we’re told that it’s going to be a snapshot. I’m not saying, “Oh, there’s a big problem at CMHC.” I don’t think I’ve said anything like that in my report.
My comments have always been — as they were earlier this week — that I can’t get the information. And the information that I get, I can’t get it put together. It’s like you have a big puzzle with different pieces, and I’m trying to put them together. I can’t get it put together.
Thank you for that. I think it does, in fact, answer my question. But it really does get to the point, I believe, that Senator Harder was trying to point us to yesterday, which is that, yes, it’s a big jigsaw puzzle by definition. A government that spends — this year it’s going to be hundreds of billions of dollars — will have many jigsaw pieces: tens of thousands of them.
We have to ask ourselves, as parliamentarians scrutinizing budgets, why we choose to focus on particular pieces. When we choose to focus on particular pieces, they have significance. By definition they have significance.
Ultimately, you chose CMHC and raised some questions about loan-loss provisions and potential defaults and so on. Why did you choose that organization over every other? Do you not think that, by focusing in the way you did on CMHC and the losses that may be impending, you might raise a question about risks within CMHC and to our housing sector?
Thank you for the question. I focused on CMHC because that’s the largest of the Crown corporations and it had the largest market debt. That’s why I focused on that one.
The information that I provided in my speech, you will remember, didn’t come from me. The source was Mr. Evan Siddall, President and CEO of the corporation, and from the former governor of the Bank of Canada. They are the ones who are publicly providing this information. That’s just another piece of the puzzle, a piece of my puzzle.
You’re saying that I am focusing on a piece here and a piece there. I don’t want to focus on a piece here and a piece there. I’m only focusing on a piece here and a piece there because the government won’t give me the whole puzzle.
Let me put it directly, then. Do you believe, based on what you’ve heard from Mr. Siddall and your own research, that CMHC is able to handle reasonable projections of mortgage defaults in this country?
Based on what the Governor of the Bank of Canada says, yes. But — I have to add this — I do think that at least some of it will roll into the bottom line of the government’s deficit. Again, it’s a piece of the puzzle, but I would like to know. We should know.
Are honourable senators ready for the question?
Is it your pleasure, honourable senators, to adopt the motion?
Some Hon. Senators: Agreed.
An Hon. Senator: On division.
(Motion agreed to and bill read third time and passed, on division.)
