:
Colleagues, I will call this meeting to order.
Welcome to meeting 17 of the Standing Committee on Government Operations and Estimates.
I have three quick points. Number one is a reminder that next Tuesday's meeting will take place from 5 p.m. to 7 p.m. Eastern Standard Time. That's Tuesday, June 9.
Second, to all of the witnesses who may be asked questions or who may participate during the Q and A, if you start a question or a statement in one official language, I would ask that you continue in that official language, rather than alternating between English and French. That will be of great assistance to our technicians, because they won't have to switch between channels.
Lastly, colleagues, Mr. Davies has presented and delivered to all of you, I believe, his opening statement in both official languages. However, in the interest of time, if we wish and if there is agreement, we can go directly to questions if I have consent for the following motion: That the speaking notes presented by Mr. Davies be taken as read and appended to the evidence of today's meeting.
Do I have consent from all of our committee members for that motion?
Some hon. members: Agreed.
[See appendix—Remarks by Mitch Davies]
The Chair: In that case, we will go directly into questions. The first round will be six minutes, followed by a five-minute round, followed by a two-and-a-half-minute round.
Mr. McCauley, you are our first speaker, for six minutes. The floor is yours.
Let me start by welcoming you, Mr. Davies, to our committee. It's good to see you. Let me also acknowledge the great work the department has done in helping us mobilize both industry and research in Canada.
In your opening remarks, you talked about the different mechanisms available to us and to the department, which the department has effectively used: i.e., IRAP, SIF, the innovation superclusters and innovative solutions.
My colleague Mr. McCauley also probed into the funding and the various organizations that have been granted this funding, whether it's funds or a grant. Can we take a step back and talk about the criteria the department uses under these programs, either to do a sole-sourcing or to evaluate the organization that is reaching out to us, either for research or for retooling?
:
I would say there are three phases of work or analysis that we think the committee would obviously pursue, but I don't want to be presumptuous as to how they would wish to carry out their mandate. Obviously, they have to turn to the situations in our sectors as they stand now, and each of them is facing very unique challenges and pressures. They have to take that into account and also understand fully our health response and how the public health advice and the evolution of the restart are affecting those sectors.
The next phase is obviously to look at how to stabilize and how to ensure that we incentivize a return to work that is safe, to make people confident and make them trust that their workplaces will be safe, and to restore confidence overall in the restart effort.
The third phase is reimagining and looking for opportunities coming out of this crisis, returning to growth and looking at each sector to identify opportunities for government, industry, and stakeholders to work together to get on a solid growth track coming out of the crisis.
I would say there are three phases of work, but again, I would defer to the council. It will decide how it will conceive of this and come back to the government of its own accord.
:
The Government of Canada has been exploring a number of options, and we are obviously aware that one of the critical factors that determine the success of exposure notification applications is uptake and the degree to which there is widespread adoption.
One of the ways to fuel that adoption is to allow for commonality and jurisdictional interoperability. That's been one of the key priorities as we've worked through this file. We continue to work with provinces and territories to arrive at a possible solution that would provide that level of interoperability and fuel that uptake.
As you note, with the absence of sufficient uptake, you actually run two risks. One is that you potentially fuel false confidence from folks who don't believe they've necessarily been exposed, but that's actually a function of the fact that they're not coming into contact with other people who have downloaded the application. The other is that we know there's interjurisdictional and interprovincial travel, and we need to ensure interoperability across those that recognizes the realities of Canadians who are crossing interprovincial borders.
We continue to work toward that interoperability goal.
Let me stick with that. You mentioned earlier that you met with.... I think this is the very first time we're hearing that the N95s are going to be way down the road. We were told in committee that masks would be coming out, I think, at the end of August. Now it's further down the road, it sounds like, for the N95s.
You said you met with other potential suppliers. Who else is getting contracts? I know that's PSPC, but who is Industry Canada meeting with to set up building N95s in Canada? Medicom got a sole-source contract, but it now sounds like it's not going to do N95s until the end of the year, if that. Who else is ISED dealing with to get the N95 masks done, which seem to be the rarest and most difficult to obtain?
Mr. Davies, Mr. Schaan and Madame McRae, thank you for your appearance here today. Your testimony, as always, has been extremely informative. I will excuse you now as we prepare for the witnesses coming for our second hour.
Colleagues, I will suspend the meeting right now, but I have just one note of caution. We do have to adjourn the meeting at 1 p.m. sharp, eastern standard time. There is another Zoom meeting that our technicians have to set up for, so we have one hour for the second meeting.
:
We will reconvene the meeting. Colleagues, we will as I mentioned earlier have to adjourn this meeting at 1 p.m. sharp. We will go directly into our statements; however, one of our witnesses, Madam Van Buren from the Canadian Construction Association, has distributed her statement in both officials languages to all committee members.
To save a little bit of time, if we wish, committee, we can adopt the following motion that the speaking notes presented by Mary Van Buren be taken as read and appended to the evidence of today’s meeting. That way we can save about five minutes, and rather than hearing her statement can go directly into questions when the statements of the two other witnesses have been completed.
Do I have consent for that motion, colleagues?
Some hon. members: Agreed.
[See appendix—Remarks by Mary Van Buren]
The Chair: Madam Van Buren, we do not need you to read your opening statement, but of course you will be participating in the questions and answers.
Our next statement, which will be five minutes in length, will be coming from the Canadian Manufacturers and Exporters.
Mr. Wilson, you’re up for five minutes.
:
Thank you very much, Mr. Chair.
Good afternoon. Thank you for inviting me here to participate in today's discussion.
It is my pleasure to be here on behalf of Canada's 90,000 manufacturers and exporters and our association's 2,500 direct members to discuss COVID-19 and Canada's manufacturing sector. Today I want to talk to you about how Canada's manufacturing sector has stepped up in the face of this crisis, how the government support has been critical to this ongoing effort and how we must begin charting a path out of this crisis towards recovery and prosperity for all Canadians.
CME's membership covers all sizes of companies from all regions of the country, and covers all industrial sectors. From the early days of this crisis, we've been working with our members and governments to increase the manufacture and supply of critical PPE and health care technologies needed in the response. We have also been educating and informing manufacturers on the latest developments in the crisis, including how to access government supports and how to protect their employees and supply chains. We have been working to understand the impact on our sector and advocating for policy, regulatory and program supports from all levels of government.
Throughout this crisis, the role and importance of Canada's manufacturing sector has never been clearer or as much discussed. Hundreds, if not thousands, of manufacturers have switched their production to support the making of critical PPE such as masks, ventilators, face shields and gowns. Many in our sector are aggressively working on developing better tests and a vaccine for COVID-19.
Despite the current challenging climate, unlike other sectors, most segments of manufacturing have been able to continue to operate, albeit at much lower production levels. Through the first six weeks of the crisis, through to the end of April, output had dropped by nearly 10% and actual hours worked declined by nearly 30%. Worse, roughly 300,000 Canadians of the 1.7 million directly employed in the sector had lost their jobs. These job losses were heavily concentrated in sectors where consumer demand plummeted, namely automotive, aerospace and energy-related areas. However, were it not for the actions of the federal government, those numbers would have been much worse.
In a recent survey of CME members, 85% of our respondents supported government actions. The most important action taken was the wage subsidy program, with nearly 55% of respondents using the CEWS. This is far and away the most used program, with tax deferral programs coming in second with roughly 30% use. The heavy use of this program can be linked back to the reality that manufacturing can continue to operate, but it is operating with significantly reduced volumes and sales. Sustaining its workforce would have been impossible without the wage subsidy, given the high overhead costs of maintaining manufacturing operations. Today, we're hearing from our members who are rehiring thousands of Canadians as they look to restart and ramp up their production.
While there are a few outstanding issues with the CEWS program, along with the myriad of other programs that have been introduced to support Canadians and the economy, by our count the government actions have been a massive success. At the same time, we believe it is time to plan the next phase of action. We must start scaling back some of these programs and reopening the economy and rebalancing the country's finances.
As the country begins to make the shift, there will be a natural inclination of governments of all stripes to focus on raising taxes to increase revenues to rebalance the finances. This would be a mistake as it would do further harm to the economy, undermine the already fragile business environment and weaken long-term economic activity. Instead, CME is calling on governments to implement a manufacturing-led growth strategy for the country that would expand economic activity, grow government revenues, job creation and exports. Next week, CME will be releasing our prosperity strategy that aims to set this framework for the country.
This three-phase strategy can be summed up the following way. First, governments must reopen the economy and begin to shift support to consumers to get them spending again.
Second, we must focus attention, investment and government procurement with actions that will support long-term economic growth and competitiveness. Specifically this must include trade infrastructure such as roads, railways, pipelines and digital infrastructure, and it must support companies to invest in new technologies to improve their productive capacity. Also, as part of this, we must include and implement some type of “made in Canada” strategy that increases marketing efforts and raises awareness of Canadian-made goods for consumers, businesses and government, as well as our trading partners.
Third, it is time for Canada to get serious about our industrial future and implement a comprehensive manufacturing strategy that can lead Canada's prosperity. Canada's business environment is simply not competitive. Two data points underscore this: first, business investment ranks fifth worst in the OECD and is roughly one-third of OECD averages; and second, Canada's share of global trade in manufactured goods has been cut in half since the early 2000s, a rate of decline that far exceeds other western industrialized nations.
This prosperity agenda must have three priorities. First, focus on driving investment by lowering operating costs, directly supporting technology adoption and fixing skills gaps. A key part of this must be to lower the tax burden and focus on growth rather than company size.
Second, Canada must reduce its complex regulatory system, which often looks like we are actively seeking to stop investment from coming to Canada through actions like the years-long investment approval processes and banning the use of commonly used and needed inputs like zinc, copper and plastics.
Next, we must focus on areas where we have competitive advantages. Creating a natural resources development strategy—
:
Good afternoon. My name is Jocelyn Bamford. I'm the president and founder of the Coalition of Concerned Manufacturers and Businesses of Canada. I am also vice-president of our family business, Automatic Coating Ltd., in Scarborough, Ontario, where we employ 90 people and own over four patents in the corrosion coating arena.
For the past few months, I've attended many committees and round tables on the pandemic recovery. Here is what I have observed. Many panels are made up overwhelmingly by NGOs, academia, not-for-profit associations and unions. Actual business owners, those people who actually employ people, represent just a tiny voice. This means that the voice of those who are paying for everything, for every government program, is under-represented. The makers' voices are drowned out by the takers'.
Please be aware of this when you're forming your policy. Those of us who had to show up every single day to keep the economy going are relegated to being told how we should open up by those who could stay safely at home during the height of this pandemic. This is wrong. The 92% of businesses in Canada who employ 100 people or fewer need to be heard on how the government should open up the economy.
First of all, we need to get back to work. We cannot sustain our country and our economy if we don't. We are at the highest level of unemployment in 38 years. Those of us who continued to work, as we were deemed essential, learned quickly how to adapt to ensure that our plants could continue to operate safely. We acted quickly to secure and manufacture PPE. We implemented new policies and procedures. We hired extra staff for cleaning. We purchased an abundance of cleaning products. Some business owners even installed tents on their front lawn so they could social-distance during breaks and lunches. We installed plastic barriers. We invented new head and face protection for all of our employees, all this while the federal government was trying to call the very thing that was protecting our people—plastics—toxic.
We are incredulous that in this time of extra cost, the federal government would heap more cost on manufacturers in terms of doubling the carbon tax. It seems as though the federal government is trying to do everything in its power to drive us out of business.
What do we need to do? Canada needs to bring back manufacturing. For the past three years, since its inception, the coalition has been warning all levels of government that there would be catastrophic effects from policies designed to drive both manufacturing and the resource sector out of the country. Those two sectors are completely interwoven together. The lack of PPE and medical supplies in our country demonstrates this. Imagine what would happen during the next crisis if we not only didn't have PPE but we also didn't have resources to operate our hospitals.
What do we need to do in order to return our economy to full operations? We need testing. This includes rapid COVID testing, faster turnaround time in testing and antibody testing. Health Canada needs to rapidly roll out these tests. One of our members who services refrigeration units had to quarantine the entire service staff due to a false COVID scare. Rapid testing could have prevented this nine-day waste of productivity for the entire team. This is what needs funding.
What we do not need is to have the federal government follow the failed Ontario green energy policy. This policy made electricity four times the North American rate for electricity due to subsidies of expensive and inefficient wind and solar, carried disproportionately by class B industrial users in the form of a global adjustment charge. In fact, one of my members just received a bill for $200 of electricity and a charge of $20,000 of global adjustment. It's these types of bills that push companies out of Canada. Carbon tax will be to fuel what global adjustment was to electricity in Ontario. It makes us uncompetitive, especially when you have products coming in from other jurisdictions that don't have these costs.
In addition, small and medium-sized businesses need more support from the Canadian International Trade Tribunal. Canadian companies must compete with foreign-dumped steel and other products. The CITT, the organization that's to guard against this, seems many times to ignore this. When they do call out unfair trade practices, the federal government overrules the CITT, as in the LNG Canada project. SMEs are not only shut out of North American large projects due to “buy America” policies, but we're also shut out of Canadian large infrastructure projects. We saw that again this week with Atlas Tube being left on the sidelines for a $200-million Alberta solar project, which instead went to a Chinese company. Canadian companies should not have to compete with subsidized foreign companies in our own infrastructure projects.
The coalition has signed on with the Canadians for Responsible Recovery, www.responsiblerecovery.ca—
:
Thank you very much, Mr. Chair. I would like to thank our witnesses for joining us today.
On March 20, the federal government announced a plan to help Canadian companies ramp up production of medical supplies needed to provide care during the COVID-19 crisis. At the time, we were told it was a strategy that would swiftly create pathways to deploy resources to Canadian businesses. Interested companies were directed to two portals, one on the ISED website and one on the PSPC website.
Ms. Bamford, given your role in representing the coalition, could you reflect on how the Canadian government approached the ramp-up of domestic production of PPE, contrast that with the U.S., and then look at the impact on our ability to manufacture these much-needed supplies?
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Thank you so much, Mr. Chair.
[Translation]
My thanks to all our witnesses.
I thank them for presenting the views of their members, their industries and their companies.
[English]
My question is going to be principally, as you would imagine, reflecting the department I represent, the construction industry. I know we've spent a lot of time thinking about how we manage through this crisis and how we manage to emerge from the crisis. I would simply point out, colleagues, we have had a remarkable run of operating safe and secure work sites. I say that, of course, in the knowledge that we need to continue to be vigilant, but the federal construction projects, and construction generally, have been operated in a safe manner. I think history will record that even in the worst days we were able to maintain the very important project on Parliament Hill in operation.
I want to thank Madam Van Buren and her membership for their leadership in proposing protocols and measures respecting the safe operation of construction sites.
My question will be for Madam Van Buren.
I know your statement contained some information on this, but perhaps you could give just a few seconds on some of the costs you're encountering, some of the unexpected or important measures I know you're having to adopt that are going to represent cost overruns or cost magnification for the industry as we go through the COVID pandemic.
:
Thank you very much for this opportunity to speak.
We have had a very strong partnership with PSPC and with many government departments. We appreciate that. On behalf of our 20,000 members, we are very appreciative of the steps that have been taken to date by Parliament to help Canadians and businesses during this COVID-19 crisis.
As you've said, the safety of our workers and our communities was always the number one priority as we worked through the pandemic. I think we've shown that we were very resilient and moved quickly to continue to deliver on the projects. Some of those costs would include, of course, all the PPE, including the masks as well as the sanitation. In some cases projects were delayed, so we had to extend the leasing, which led to financial costs.
In terms of physical distancing, we could have fewer people on the work site than we normally would—one person per truck, for example. We could have only a certain number of people in an area for a certain amount of time and we would have to look at the sanitation of equipment, pre and post. There are numerous costs that have been incurred by the industry, in terms of both productivity and hard costs. Our ask is that the government, which we know is a responsible and fair owner, will reimburse us for these costs on federal projects.
Normally these sorts of things would be treated at the end of the contracts, but for some of these federal contracts, that could be 12 months to three years from now. Many of our contractors are very small. Seventy per cent of our industry consists of small and medium-sized enterprises. Getting them this cash is very important now as we lead into the ramp-up and we help Canada get back to economic recovery.
My first question goes to the Canadian Manufacturers & Exporters.
Since the crisis began, the Bloc Québécois has been asking the government for all kinds of measures, changes, modifications, and new programs to allow taxpayers, the public at large, but also companies, to keep their heads above water in this these difficult circumstances.
One of the measures that the Bloc Québécois asked for was the good old fixed costs subsidy. Certainly, companies have variable costs like staff salaries, but companies often stop paying those variable costs if they are not active. However, it must continue to pay its fixed costs. We saw that it was necessary to provide significant assistance for those fixed costs and we very much regret that the government provided very little.
In fact, the only measure that the government provided was the Canada emergency commercial rent assistance. This restricted assistance targets only mortgaged property and monthly rent to a total of less than $50,000. That is quite limited, and, on top of that, the owners have to be in agreement.
Is that frustrating for the manufacturers and exporters in Quebec, who often need major facilities and a lot of space for their activities?
:
Thank you for the question.
You mentioned two things, and I'll add a third. On the lease program itself, frankly, the feedback we've received from our members is that it's not really relevant, for a variety of reasons. It's too small, and it relies on the landlords themselves to apply for the funding and then eat the 25% losses.
We're suggesting instead that the money, just as in the wage subsidy program, should go directly to the tenants, and then the tenants can pay the landlords that way.
We think the program has been designed backwards. We've communicated that, and hopefully we'll see some adjustments on it. It needs to be bigger and targeted at the tenants rather than the landlords.
The other piece you didn't mention, which was mentioned by others, is the absolute cost of operating safely. The extra barriers that are put in place and the PPE that's required, based on new government guidelines and regulations, are incredibly expensive. Even the ability to continue social distancing and operating at the same time means things like break rooms can't be used the same way they used to be.
There are a lot of additional costs, such as on-site testing for temperatures and things like that, which some of our members are doing. We need some type of support for that, in addition to the training of the executive and the staff. We need some help on those fixed costs in those areas for sure.
Ms. Bamford, my first question is for you. I know you're from the manufacturing sector. I worked in that sector for about 11 years. I understand that we have such a disadvantage: Our productivity is not great, and policies don't help to give us a competitive advantage, at least to produce for the local market rather than exporting product overseas.
Now we're on the verge of allowing suppliers to come forward, and you mentioned political interference in selecting suppliers. I've heard some complaints from small and medium-sized companies about how favouritism is given to major ones, especially for sole-source contracts and so forth.
Now we're at another stage, which is awarding licences for manufacturers to produce product. As far as I understand, we should have opened the door for smaller companies everywhere in the country to come forward, and given them the opportunity to produce product that we're going to need for a long time.
Do you believe there is political interference in awarding licences in manufacturing, and specifically for PPE?
We were listening in on the early part of the presentation from the Department of Industry government officials, and I think the example of the N95 masks that came up was a classic example. It was a sole-source contract. Again, the transparency and accountability are not there. Nothing personal to the bureaucrat involved, but he couldn't answer your questions as to when these masks were going to be delivered. This is, of course, a pretty crucial piece of PPE.
Small to medium-sized firms always have trouble accessing government programs like this because of the massive amount of paperwork, bureaucracy and so on. That's always a challenge, particularly now, and everybody's trying to do things really fast, so that doubles the issues here.
Again, if there can be transparency and accountability...because there's none. In the case of this N95 company, the bureaucrat could not answer when there would be masks, so I think that was a classic example.
Again, I'm telling the committee things they already know, but the four-hour discussion on June 17 is the only opportunity, unless there's a motion such as Mr. McCauley's, to look at the supplementary estimates before that.
Are there any other comments besides Mr. Green's before we vote on Mr. McCauley's motion?
I see none. We will call the vote.
(Motion agreed to: yeas 10; nays 0 [See Minutes of Proceedings])
The Chair: Mr. McCauley, we'll go back to you. We have five minutes left in our meeting, and I did not dock your time because of the—