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Senator Plett points to the Prime Minister’s attempt to deflect attention from his own incompetence on Bill C-9

November 19, 2020 (Ottawa, ON) - The Honourable Don Plett, Leader of the Opposition in the Senate, issued the following statement:

Honourable senators, I would also like to say that I will be brief, but I will not be able to say that.

However, I do also want to echo Senator Marshall’s comments in thanking the committee that met to deal with this legislation during the remembrance break. The work that all of our committees do is appreciated, especially in the times that we are in.

Colleagues, today we are considering Bill C-9, An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy).

Colleagues, this legislation does two things. First, it amends the Income Tax Act to revise the eligibility criteria and subsidization level under the Canada Emergency Wage Subsidy and extends the subsidy to June 30, 2021.

Second, it amends the Income Tax Act to introduce the Canada Emergency Rent Subsidy.

While the changes regarding the wage subsidy are largely a further extension of the existing program with additional support in the event of lockdowns, the Canada Emergency Rent Subsidy is a significant overhaul and a relaunch of the now defunct Canada Emergency Commercial Rent Assistance program, known as CECRA. These changes to CECRA are long overdue, improvements that Conservatives have been calling for since spring.

It was May 20 when the Prime Minister announced the Canada Emergency Commercial Rent Assistance program for small businesses was coming online in a matter of days. According to the government, the program would “provide important relief for small businesses experiencing financial hardship” and was “another measure” to “help keep Canadians on the payroll.”

The following day, on May 21, the Conservative Party warned the government that the program contained two major flaws that would limit its effectiveness.

First, the program was designed so that businesses would not be eligible for the rent assistance until they had a revenue drop of at least 70%. This meant that for businesses that experienced a 69% drop in revenue, the program was useless; they were not eligible. And if a business had seen a revenue drop of 70% and were eligible for the program, they would lose all the rent assistance as soon as their revenue improved 1 percentage point, from minus 70% to minus 69%. Any junior public policy analyst would have immediately realized that such an all-or-nothing approach with a sudden drop-off in benefits was bad public policy, yet the government seemed to be oblivious.

The second major flaw with the program was that the businesses were prohibited from applying for the assistance. Instead, it was up to the landlord to determine whether they would make this assistance available to businesses that leased space from them. But in order to do so, the landlord would be required to absorb a 25% loss of rental income. This may have been the first time in history that a government had the brilliant idea of providing financial assistance while prohibiting the intended recipients from applying for it.

The Conservative Party flagged these problems within 24 hours of the Prime Minister’s announcement and called on the government to fix them. But the government did nothing. Instead, they watched as business after business that did not qualify for their poorly designed program struggled to survive, piled on debt by deferring month after month of rent payments or simply closed their doors for good.

The Canadian Chamber of Commerce recently said:

CECRA was problematic from the start, and a large number of small businesses have struggled without access to any rent support for months.

The Canadian Federation of Independent Business said that “the government’s rent assistance program remains dramatically underutilized.”

Their latest survey revealed that only 22% of businesses were able to use the program. The Canada Emergency Commercial Rent Assistance Program was supposed to provide $3 billion of much-needed relief to small- and medium-sized businesses. But because the government refused to listen, it failed to get that money into the hands of those who needed it. At least a billion dollars was left sitting on the table while businesses went broke.

Today, 26 weeks after the Conservative Party pointed out the flaws in the program and called on the government to fix them, the government is now finally taking action and implementing the changes that we identified. That is six months of business owners spending sleepless nights wondering about their future, how they would pay their bills, feed their families and keep a roof over their heads; six months of this government refusing to acknowledge that the life raft they had tossed out, called CECRA, was much too small and didn’t float very well; six months before they bothered to build a better one for business owners who were drowning in red ink while fighting to keep their heads above water.

Colleagues, the Conservative caucus supports the changes which are being introduced in legislation before us. In fact, we supported them 26 weeks ago when they would have helped many more business owners, but the government refused to listen.

This government’s practice of trotting out programs which are not well thought out and then resisting constructive recommendations to improve them is becoming a clear pattern. We see this once again when this bill is before us today.

The Canadian Chamber of Commerce and the Canadian Federation of Independent Business have been pleading with the government to make the new Canada Emergency Rent Subsidy retroactive, but as usual the government has refused to listen. The CERS program will cover October’s rent but will not cover the earlier months.

Yet, it was because of this government’s refusal to fix the program sooner that many businesses were unable to access the program and pay their rent. Many businesses survived only by going deeper into debt and deferring their rent payments. This debt burden now hangs over their heads and threatens the viability of their businesses and the jobs of their employees.

Since the new Canada Emergency Rent Subsidy was created to fix the failure of the rent assistance program, why would the government not make it retroactive to cover what CECRA was supposed to cover in the first place? Why not allow those businesses, which qualified for assistance under CECRA, but could not access it because their landlords did not apply for it, access the money that CECRA left on the table?

Let me assure you, colleagues, there are no good answers to these questions. But if you would like to know how the Minister of Finance responded when she was first asked about it in the other place, I can tell you. She said, “We have to cast our eye to the future rather than look to the past.”

Colleagues, what does that mean? “We have to cast our eyes to the future rather than look to the past.”

Does the Liberal government’s future not include the viability of businesses which have struggled through the pandemic because the rent subsidy was not available to them?

Does the future not include the jobs that are going to be lost when those businesses declare bankruptcy under the crushing debt load that the Finance Minister so flippantly dismisses?

Does the future not include the financial well-being of families who will struggle when they lose their jobs after the businesses close their doors?

If the Finance Minister wants to cast her eyes to the future, I suggest she start listening to what the country’s largest business organizations have been telling her. This program needs to be retroactive in order to rescue those businesses who are struggling to survive because of the failures of the first program.

In a recent survey, the CFIB found that 15% of its members qualified for CECRA, but their landlords would not apply. Another 16% did not qualify because the required drop in revenue was too steep. In both cases, the tenants were left on their own, struggling to make their rent payments or take on more debt.

The CFIB has estimated that 160,000 businesses are in danger of permanently closing due to COVID-19, with the potential for that number to rise to 225,000. That, colleagues, is the equivalent of all the small- and medium-sized businesses put together in the Territories, Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan and almost half of those in Alberta.

Those are the number of businesses which are in danger of permanently closing due to this government’s incompetence, because while 400,000 businesses should have qualified for CECRA, CMHC told the Senate Finance Committee that only 139,000 small businesses had received the aid.

The program was a flop. And now, when the government has a chance to fix that by making the new program retroactive, they refuse.

Imagine how these struggling business owners must have felt when they heard the Prime Minister stand up a week ago and say:

I’m imploring the premiers and our mayors to please do the right thing: Act now to protect public health. If you think something is missing in the support we’re offering for your citizens, tell us. Whatever it takes, however long it takes.

He tells the premiers and the mayors that if they need to shut down their economy to protect public health, the federal government will be there to provide, “whatever it takes, however long it takes.”

And yet, when he and his Finance Minister are told in no certain terms what is needed, they do nothing. With their fingers in their ears, they dig in their heels, bury their heads in the sand and refuse to listen. This is a persistent pattern with this government. We see it over and over and over.

This spring, the Conservatives told the government that the CECRA program would be better run by the Canada Revenue Agency than by the Canadian Mortgage and Housing Corporation. CMHC deals with residential mortgage insurance, not commercial rent, and was not well suited to deliver this program. The government refused to even consider it. They said it was impossible to have CRA deliver the subsidy.

But sure enough, CMHC ended up needing to subcontract the program out to a private company. Listen to this: It just happened to be a mortgage financing company whose vice-president just happened to be married to the Prime Minister’s Chief of Staff. Does that sound like a WE program?

This time around, we see that the revamped CECRA program is now going to be delivered by none other than the Canada Revenue Agency. The government now admits that it is not only possible for CRA to deliver the program, it is preferable.

Colleagues, listening is not this government’s strong point and neither is accountability.

Conservatives support this legislation, but we are deeply concerned about the Liberal government’s dismissive attitude toward the need for transparency and accountability.

On October 14, the International Monetary Fund released its semiannual Fiscal Monitor report, and noted that Canada is currently running the largest deficit in the world at 19.9% GDP. Yet in spite of this, we haven’t had an update on COVID spending since August 6, we haven’t had a fiscal snapshot since July 18, and we haven’t had a budget, colleagues, since March 19, 2019 — 20 months ago.

On October 20, Don Drummond with the C.D. Howe Institute wrote the following in a brief on fiscal and tax policy entitled Canada’s Foggy Economic and Fiscal Future. He said:

Even before the pandemic, Canada was not well positioned for big increases in federal government spending. It is even more constrained now by the borrowing associated with pandemic-related revenue declines, and far more by pandemic-related spending. The September Speech from the Throne paid no heed to this reality. To make the country’s fiscal choices clearer to Canadians, and perhaps to itself also, the government must provide more economic and fiscal information . . . .

On November 4, it was the Parliamentary Budget Officer’s turn to slam the government for not disclosing critical financial information. Writing about Supplementary Estimates (B), which outline an additional $79.2 billion in government spending, he said the following:

While the sum of these measures is significant, the amount of information that is publicly available to track this spending is lacking, thus making it more challenging for parliamentarians to perform their critical role in overseeing Government spending and holding it to account.

As of the publication of this report, there is currently no public document published by the Government which provides a complete list of all measures announced to date, or updated cost estimates. There is also no consistency to which organizations publicly report on the implementation of these measures. Some organizations have proactively published this data, while others have not.

This lack of data is not a result of it not being available. The Department of Finance had been providing bi-weekly updates to the Standing Committee on Finance (FINA), but stopped when Parliament was prorogued in August 2020. 

Colleagues, the contempt that this government displays toward Parliament by refusing to provide the information necessary for parliamentarians to do their work even extends to the floor of the House of Commons.

On November 5, MP Pierre Poilievre asked the Minister of Finance a very simple question: What would it cost Canadian taxpayers if the interest on the national debt increased by 1%?

It was a fair question, one that Canadians deserve an answer to. But the Finance Minister repeatedly refused to answer the question. Instead, she shot back:

Madam Chair, the question is, what is the Conservative Party’s policy? Is it a policy of austerity, or is it a policy of supporting businesses?

Instead of answering the question, the Finance Minister dodged it and tried to equate accountability with austerity. This would be absurd at the best of times, but it is utterly ridiculous in the middle of a pandemic when government spending is at an all‑time high.

Conservatives have worked hard to ensure that Canadians get the support they need during this time of crisis and get it quickly. But unlike the Liberals, we don’t believe that requires suspending the need for transparency, accountability, timely reporting, budgets and financial updates. We believe the government can support Canadians through the pandemic and be accountable to Canadians at all times.

Contrast that with the Liberals, who claim they have no time to be producing regular financial reports on the state of the nation’s finances and no time to be accountable at committee about their multiple scandals, yet they then refuse a simple request to have the Canada Revenue Agency hold off on auditing small- and medium-sized businesses until June 2021.

Remember, this is the same government that said it will do “whatever it takes, however long it takes.” It is very difficult to determine if this government is sincere, insincere or just incompetent.

As you know, the Canadian Federation of Independent Business blew the alarm last week, noting that the CERS program has a fatal flaw: It requires businesses to pay their rent before they can apply for assistance under the CERS to pay the rent. In other words, if a business cannot pay its rent, then it will also be unable to apply for government assistance to pay the rent because without paying your rent, you don’t qualify for the assistance to pay the rent.

Is this an oversight or, again, is this incompetence? Either way, the government scrambled to fix the error by creating an amendment. But after erring in the drafting of the bill, they also erred in the drafting of the amendment, so the Deputy Speaker of the House had to rule it out of order.

In her opening remarks to the Standing Senate Committee on National Finance last Thursday, Minister Freeland indicated that due to their failure to draft proper legislation and then their subsequent failure to draft a proper amendment, they are now going to “swiftly introduce legislation to formalize rent payable as an eligible expense.”

She went on to say:

Given that this is our clear and publicly stated intention, we are confident that the Canada Revenue Agency, CRA, will consider rent payable as an eligible expense from the moment the new rent program is launched. There will be no delay.

In other words, the Minister of Finance believes that as long as her government plans on introducing legislation, the CRA doesn’t have to wait for Parliament to pass legislation. Then why are we here? She thinks that it is enough for CRA to know that this is the government’s “clear and publicly stated intention.”

So not only is this government incompetent, but now they consider themselves to be a proxy for Parliament as a whole. They think they have the power to instruct the civil service to break the existing law because they are planning on changing the law, even though Parliament has neither considered nor consented to the legislation they plan on introducing.

This is not how democracies work. When the Minister of Finance was here in this chamber earlier this week, she was asked about this flagrant disregard for Parliament twice, first by Senator Carignan and then by Senator Batters. The minister simply shrugged it off, telling this chamber that the urgency of the situation required an urgent response. She said:

. . . if we proceed in that fashion, our businesses will have to wait even longer. . . .

. . . My objective is to get the support to Canadians as quickly as possible.

So Madam Minister, let me see if I have this straight. Six months ago, you were made aware that the changes were urgently needed to the rent program but you did nothing. Now, after refusing to act for 26 weeks, you suddenly have an emergency on your hands, with no choice but to pressure the CRA to operate outside of the legal parameters that have been approved by Parliament, and we are supposed to just nod and look the other way.

This is both unbelievable and frightening, colleagues. But it explains why this government waits until the eleventh hour to introduce legislation, refuses to accept any amendments and then rams it through with time allocation. Apparently, if something is wrong with their legislation, they are of the opinion that they can just unilaterally correct it by issuing a Liberal Party royal decree.

Colleagues, there is another way. It’s called consultation and collegiality. We are, after all, in the middle of a national health emergency. Surely the government could set aside its petty partisan politics and work collaboratively with others in a time of national crisis.

Consider for a moment the pre-study report at the Standing Senate Committee on National Finance on Bill C-9. The Finance Committee sat for three meetings over two days for five and a half hours to hear from 18 witnesses representing 10 organizations. In that limited amount of time, colleagues, they were able to pinpoint no less than 12 problems with this legislation. For the record, let me list them for you.

Number 1: the legislation requires businesses to pay rent before receiving the subsidy, even though they may not have sufficient funds to pay the rent.

Number 2: the new subsidy should be retroactive to April 2020 because businesses were unable to access the previous program, CECRA.

Number 3: businesses that changed the terms of their lease, for example, by moving to a less expensive location, would be excluded from the subsidy.

Number 4: to be eligible, businesses need to have a track record of expenses in 2018 or 2019, or at least January and February 2020, which excludes new businesses.

Number 5: businesses that do not have a business number — for example, a music school that is exempt from GST or HST — would not be eligible.

Number 6: the maximum cap on the subsidy reduces the level of support for businesses with multiple locations, such as franchises, as well as businesses operating in the downtown core of cities where rent is much more expensive.

Number 7: the subsidy top-up is only available to businesses that must cease operations due to public health orders, even though other public health restrictions, such as ongoing capacity limits, may lead to a similar level of revenue decline.

Number 8: seasonal businesses may only have to pay fixed costs at certain times of the year.

Number 9: Indigenous businesses renting space in band-owned buildings on reserves are not eligible. Colleagues, this is a government that prides itself on helping the Indigenous community.

Number 10: businesses that rely on the Scientific Research and Experimental Development Tax Incentive Program may be at a disadvantage, as the wage and rent subsidies reduce eligible expenses for the credit.

Number 11: property owners’ fixed costs are approximately 25% of normal revenue, but only 10% of the costs are eligible.

Number 12: property owners were not eligible under the previous rent program.

The Finance Committee identified 12 problems with the legislation in only five and a half hours. This begs a very simple question: why was it possible for the Senate Finance Committee to uncover all of these issues in such a limited amount of time while the government went through the entire process of envisioning, drafting and tabling legislation without realizing, acknowledging or addressing even one of them?

The answer is simple: the Finance Committee took the time to consult with those whom this program is supposed to help — something this government could have done, but obviously did not.

Colleagues, I’m beginning to have a real sense of déjà vu. Here we are once again being asked to pass another flawed bill that needs numerous amendments. However, because the government took six months to get around to it, it is now an emergency and there isn’t time to get it right.

To make matters worse, we are being asked to approve significant financial measures without having updated financial information. Bear in mind that the legislation before us amends the Income Tax Act. This means that the spending it authorizes will not require further statutory approval. This spending will not appear in the estimates, the supplementary estimates or require an appropriation bill.

Furthermore, while most money approved in appropriation bills expires at the end of the fiscal year, the permission to spend in standing legislation does not expire; it is only constrained by the parameters within the enabling legislation itself. I would also note that significant expenditures under this legislation are going to be determined by regulation requiring no further consultation with Parliament. In other words, we do not know what this bill will cost Canadians.

Let that sink in for a moment, colleagues. We are being asked to approve a bill, and we do not know what this bill will cost each and every one of us and every Canadian.

I challenge you to find a single corporation in the country whose board of directors would approve billions of dollars in new spending without being provided with an up-to-date report on their financial position. You will not find one, yet here we are today doing exactly that.

Colleagues, when the Minister of Finance was here in this chamber on Tuesday, I asked her nine specific questions. Those were not abstract questions about possible future spending or projected program totals; they were questions about the current state of the nation’s finances and how much was spent on the programs. The minister did not answer one of those questions. Instead, she repeated the same estimates that had been previously released.

Here’s what she said:

When it comes to money that the government has spent so far, I am very happy to give you our estimates of the costs of the programs that I’m asking you to review, and maybe I’ll start there. I think that’s very appropriate.

No, Madam Minister, that is not at all appropriate. The Senate is being asked to approve a program that will add billions of dollars to our national debt, yet you cannot even provide us with an up-to-date total of what has been spent so far or tell us what our national debt is. This, colleagues, is unacceptable.

We must remember that the person steering the ship of state through these stormy waters is none other than a prime minister who told Canadians, “We took on debt so Canadians wouldn’t have to.” Did he go to his bank account?

Senator Martin asked in this chamber the other week:

What does that even mean? Does the Prime Minister not understand that public debt must be repaid by public money, which comes from . . . taxes . . . ?

This man thinks the budget will balance itself. He thinks that he is giving us money. He thinks we are approving a bill where he will take money out of the Bank of Montreal and send it to us. He is spending our money, colleagues. Does he think the government debt will be magically repaid rather than being deducted off the paycheques of school teachers, labourers, farmers, truck drivers, store clerks and — yes — plumbers and every other taxpayer across the country? Is that why he won’t give us the numbers?

Remember, colleagues, that according to the Parliamentary Budget Officer, the government has these numbers. It’s not that they are unavailable; the government simply does not want to give them to us.

On Tuesday, I requested that if the Finance Minister could not provide us the answers during her testimony she provide them in writing before we were asked to vote on this legislation. Colleagues, we are minutes away from that. I have not received one answer, colleagues. Is that how our Parliament works? There has been radio silence. It’s shameful, colleagues. This is unacceptable. It is nothing but arrogance and incompetence.

And because of this government’s incompetence, we now find ourselves being asked to pass a badly flawed piece of legislation again today, because businesses have made it clear that they can wait no longer.

The Canadian Federation of Independent Business told the Finance Committee that only 66% of small businesses across the country are fully open, only 29% of small businesses are at normal levels of sales, 37% of small businesses are losing money every day they are open and 14% are considering shutting down permanently.

Restaurants Canada told the committee that the food service sector lost more jobs in the first six weeks of the pandemic than during the 2008-09 recession for the entire Canadian economy. Moreover, since the beginning of the pandemic, more than 10,000 restaurants have already been shut down.

The Hotel Association of Canada warned the committee that 60% of its members are concerned that they may not make it past Christmas without additional support.

On Monday I received a letter — as did Senator Gold — from Mayor John Tory. He said this:

I respectfully request that as of today, you amend your timetable in whatever manner is necessary to pass this Bill in the next 24 hours, understanding this is a business emergency, as well as a health emergency, and in view of the desperate plight of many of our small businesses.

Every hour counts and I believe the work you must do could be substantially compressed. We have seen legislation passed through the Senate in a day when circumstances required. This is one of those times.

Colleagues, in that letter you can hear the sound of desperation.

To be honest, I didn’t appreciate receiving it from the mayor, because it is the Prime Minister he should be pressing, not senators. Be that as it may, I understand that his letter is an echo of the anxiety being faced by business owners across the country. Instead of taking timely action, this government sat on its hands for too long, and it has managed to wind the clock down until every hour counts.

The Prime Minister has fumbled this file badly, as he does most, but he has the gall, colleagues, to stand in front of the media on Tuesday morning and demand that the Senate pass the legislation when it had not even arrived in this chamber. He doesn’t even want us to debate legislation. He wants us to pass it before it even gets here. This is how this government operates. It is shameful. Do not be fooled.

It is the government that is responsible for setting the legislative agenda. It is the government that prorogued Parliament in an attempt to cover up their WE Charity scandal, causing unnecessary delays. It is the government that introduced flawed legislation and then followed it up with a flawed amendment — nobody but the government. Then the Prime Minister thinks the solution to all the problems he has created is to publicly flog senators into passing his broken legislation without giving it proper scrutiny and review.

Honourable senators, clearly this is nothing more than the Prime Minister attempting to deflect attention from his own incompetence. Today, for the sake of Canadian businesses and Canadian families, we have little choice but to support this legislation. When this pandemic eventually draws to a close, as we know that it will, Canadians need to take a hard look at the damage and destruction that has been wreaked upon Canada’s economy and realize that a very difficult situation has been made much, much worse because of this government’s gross incompetence and its contempt for Parliament. Thank you, honourable senators.


Senator Plett's speech on this issue can also be found here.

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