Thank you very much, Senator Lankin, for your comments. Honourable senators, I will try not to be repetitive, but I won’t avoid it in all cases. As Senator Lankin said, Bill C-14 proposes to implement some of the initiatives announced in the federal government’s Fall Economic Statement, which was presented in the House of Commons at the end of November.

The bill consists of seven parts. I’m going to work backwards or start working backwards. My first comments relate to Part 7 of the bill because I feel that that part of the bill is the most controversial. This part of the bill proposes to significantly increase the limit of the Government of Canada borrowings from the current limit of $1.168 trillion to $1.831 trillion. So that’s quite a significant increase over the next three years. It actually works out to 57%.

The increase will be established by amending the Borrowing Authority Act, and that act was established back in 2017. I was actually on the Finance Committee when that was done. The act permits the Minister of Finance to borrow money with the authorization of the Governor-in-Council. It establishes the maximum limit, or ceiling, on the amount to be borrowed.

Now, there are also provisions in the Borrowing Authority Act that permit the minister to borrow in certain circumstances, and those amounts do not count toward the maximum limit, but that’s now being changed, as Senator Lankin indicated.

In 2017, a limit of $1.168 trillion was established. That includes not just the central part of government but also all its Crown corporations. It is for a three-year period and it also provides for a 5% contingency amount.

In addition to establishing the borrowing limits under the Borrowing Authority Act, the government outlines its projected annual borrowings each year in its Debt Management Strategy. This is followed up by an annual Debt Management Report, which outlines actual borrowing activities.

In addition, the Borrowing Authority Act requires the minister to table a triennial report in Parliament disclosing specific information on the government’s debt, along with an assessment of whether the limit on borrowings should be increased or decreased. Since there had not been a budget for two years, the government outlined its Debt Management Strategy in 2020-21 and its July Economic and Fiscal Snapshot, and again in November in its Fall Economic Statement.

I am mentioning this because, if you are interested in tracking what’s happening with the government’s debt, there is information out there. It is not complete, but it is a good start.

Included in the Fall Economic Statement, the government outlined its proposed amendments to the Borrowing Authority Act, but they also provide an analysis of how the new proposed limit of $1.831 trillion was determined.

As I indicated in my speech at second reading, the analysis, which shows the calculation of the new debt ceiling in the Fall Economic Statement, is somewhat confusing. The minister, when she testified in the House of Commons, kept referring to that. I think it is on page 141, but it is rather confusing because it uses the debt right in the middle of the fiscal year, in October, as a starting point, rather than at the beginning of the fiscal year. So it was really difficult to track it. In addition, the composition of some of the numbers used to build up to the new limit was difficult to follow.

The $663 billion increase in the debt ceiling includes an $87 billion contingency amount based on 5% of all of the debt up to the proposed debt ceiling; not just the increase but the entire government-projected debt. So why government would include a 5% contingency on debt already incurred has not been explained. I did ask that question to the Department of Finance official in committee and I didn’t get what I thought was a reasonable explanation.

The 5% contingency was already provided on the initial debt ceiling back in 2017, so why is the same 5% contingency amount being provided for a second time on the same debt? So it should have been applied only to the incremental portion, the $663 billion, and that would amount to $33 billion, not the $87 billion. So the $87 billion contingency and the $663 billion projected ceiling actually works out to 13%. So it is really quite a generous contingency in the government’s calculation, and I felt that the government was probably padding its numbers. On the other hand, perhaps they will need it, but it is quite a substantial contingency, that $87 billion.

So the other issues concerning the significant increase in the debt ceiling need to be addressed by the government. For example, how much of this increased debt will be purchased by the Bank of Canada? Finance officials told us that, thus far since the beginning of the crisis, the Bank of Canada has bought $240 billion of the government’s debt. In addition, the Bank of Canada recently indicated they will now reduce the purchase of government debt to $3 billion a week. This is interesting because the government has indicated its budgetary balance for 2021-22 will be $155 billion. That works out to $3 billion a week. So the question is: Is the Bank of Canada going to be purchasing all of this incremental debt?

Senator Lankin mentioned that the information has sort of been overshadowed now by what’s in Budget 2021. But when I looked at Budget 2021 it indicates that the borrowings estimated for the fiscal year are now higher than that projected in the November Fall Economic Statement. If you want to track the numbers, you will see they are growing. For example, the November statement indicated that $121 billion will be borrowed for the budgetary balance, but now Budget 2021 disclosed that it has been increased to $155 billion.

In addition, Finance officials at our Finance Committee meeting last week were asked to update that analysis on page 141 of the Fall Economic Statement that the minister kept referring to. They were asked if they could just rework that schedule to reflect current numbers. And when we worked the numbers, they indicated that the debt ceiling would actually be $5 billion higher than the amount proposed in Bill C-14. So the numbers are moving higher. They are not moving lower and they are not remaining static. They are increasing.

There has been a lot of discussion about the increased debt and the much higher proposed debt ceiling. We’ve also discussed it along with the risks associated with the possibility of rising interest rates. The Bank of Canada and others have indicated that interest rates are likely to remain low, but these are forecasts. There are no guarantees. In fact, interest rates have increased — a small amount, but nonetheless they have increased — since the Fall Economic Statement. These increases are apparent when you compare forecasted public debt charges in November’s Fall Economic Statement to the forecasts of public debt charges in Budget 2021. You have to remember that these projected increases have occurred over a very short time frame: effectively four and a half months.

Budget 2021 also indicates that the increase in predicted public debt charges in the budget reflect higher interest costs on interest-bearing debt due to higher interest rates and a revised financial requirement. We haven’t had any meetings yet on the budget, but I’m thinking that the “revised financial requirement” means that the government is going to have to borrow earlier than what they had projected.

Just to give you an idea of the magnitude of the amounts involved when you talk about forecasted interest, I have the numbers for the five years that the government included in Budget 2021. I will just mention a couple of years. The year we’re in now, they initially estimated that the debt charges would be $20.3 billion and that has now gone up to $22.1 billion, so that’s an increase of $1.8 billion. If you look at the fiscal year two years hence, 2023-24, the amount has gone from $25.7 billion to $30.5 billion; an increase of about $4.8 billion.

While the interest rate increase might be small, because of the magnitude of the debt the numbers are in the billions of dollars. They are significant increases, so we have to be aware that that is a risk associated with the increased debt.

In addition to the risk of rising interest rates, there are other pressures on the debt ceiling. Program expenses projected in the Fall Economic Statement have increased in Budget 2021. For example, in the year we are in now it was initially estimated to be $421 billion. Now it has been increased to $475 billion, and that’s because some of the stimulus money appears to have been pushed to the front.

While the program expenses are projected to decrease next year from $475 billion to $403 billion, business leaders who testified at the National Finance Committee last week indicated that COVID financial supports, many of which will terminate in September, will be required into the 2022-23 fiscal year and maybe even beyond. Senator Lankin mentioned that in her remarks.

For example, Susie Grynol, who is President of the Hotel Association of Canada, told us that while there is optimism that vaccines will bring the economy back to normalcy by the end of the fiscal year, she said this won’t happen for her members before the fall of 2022 at the earliest and many project their recovery will not be until 2024-25. She said that the COVID programs are ending for everybody in September. The way she put it was that this cannot fundamentally be, because there will be a complete collapse of the hotel and travel industries.

Dan Kelly of the Canadian Federation of Independent Business also testified at the National Finance Committee and said that even when customers return and businesses can reopen and start to resume normal operations, they will have to deal with the legacy of their COVID-related debt. He said many of their members have incurred debt over $100,000, and that will have to be repaid and will be a challenge.

So while the government has laid out their spending and borrowing plans for this year and beyond, there will be pressure for more COVID-related spending, and this will probably affect the level of debt and the proposed debt ceiling.

Then how will we pay for all this new debt? I guess with increased taxes. Government has introduced some tax increases in Budget 2021, which is their pre-election budget, but with a new mandate Canadians should be prepared to pay further taxes.

Those are my comments on the debt ceiling. I’m going to move now to Part 1 of the bill, and I will go through Parts 1, 2 and 3. I will be brief with most of my comments until I get to the issue with regard to the parliamentary oversight that Senator Lankin mentioned in her remarks.

The first part of Bill C-14 provides additional support to families that qualify for the Canada Child Benefit if they have children under the age of 6 years. I commented on this part of the bill in my second reading speech, and Senator Lankin explained it quite capably a few minutes ago, so I don’t have any additional comments on that part.

Part 1 also amends the Canada Emergency Rent Subsidy program so that an expense can qualify as a qualifying rent expense when it becomes due rather than when it is paid. I did want to go back and give you a bit of history about the program and bring you up to speed, because the program has had problems since its inception. I always refer to it as having a “troubled” history. The initial rent subsidy program was announced last April. It was administered by CMHC, and the objective was to lower the cost of rent for small businesses. The original estimate for the program at the time was $3 billion, but the uptake was very slow. At that time, the Canadian Federation of Independent Business — they are very critical of the program — said the program was too complicated, too reliant on landlords to administer and too restrictive as to the income reduction to be experienced by businesses before they could qualify.

So we knew last summer that there were problems with that program. When Bill C-20 came before the Senate last July to extend the wage subsidy program, it didn’t address the problems with the rent subsidy program. I can remember speaking to that bill and saying that it was a missed opportunity for government because they had the opportunity then to amend that program.

Then in December Bill C-9 addressed some of the problems associated with the program. But it soon became apparent that there were problems with that bill also, and that businesses would have to pay their rent before they could claim it and receive their money from the government. This was a major problem for businesses that had no cash to pay their rent in advance. So this amendment to the Income Tax Act allows the government to reimburse business owners for their rent before it is actually paid.

Dan Kelly of the Canadian Federation of Independent Business said that while the rent subsidy program has been helpful to some, the entire program has been a real struggle. He said only a quarter of businesses that are members of their association have used the rent subsidy program. He said even with this amendment in Bill C-14 there is still a problem. He said to obtain the subsidy the business has to show that the entire rent is being paid. So if the subsidy pays 50% of the rent, the other 50% has to be paid at the same time. If the landlord is willing to reduce the rent by 50% or defer payment of the other 50%, that’s not allowed under the program. Mr. Kelly said the business has to pay the full rent if it is to receive the rent subsidy, and this a problem for the cash flow of the companies applying for the subsidy.

The Canada Revenue Agency now administers the rent subsidy program. As I mentioned, CMHC initially did but now it’s the Canada Revenue Agency. Officials provided some interesting testimony at the Finance Committee.

They told us that while the amendment has yet to be passed by Parliament, the amendment has already been implemented even though it hasn’t been passed by Parliament. We were also told that it’s common practice when it comes to tax legislation to administer the legislation in draft form, and what was meant by that was before it gets approved by Parliament.

The Minister of Finance confirmed that it is government policy to implement proposed tax legislation before it’s approved by Parliament. And that’s an interesting concept now. I was surprised when the officials said that at the Finance Committee, and then I thought, well, we’re going to get a Budget Implementation Act and that’s going to have proposed tax changes. So I’m waiting to see now which of the tax changes in the Budget Implementation Act are going to be implemented and passed in the budget implementation bill.

Really, what we were told is that parliamentary approval isn’t required to implement proposed tax legislation. Put simply, proposed tax legislation is implemented by the government without parliamentary approval but with the expectation that Parliament will, to use a term, “rubber-stamp” the legislation. Senator Lankin used the term “administrative workaround.” I must remember that phrase, but I always refer to it as rubber-stamping.

That raises another interesting point because this was said in the context of proposed tax changes, but when the official told us that, I started to remember back to Supplementary Estimates (C). We usually look at Supplementary Estimates (C) for the month of March near the end of the year. I can remember on a couple of occasions when Supplementary Estimates (C) were being studied around March 20. I would ask the officials if they were sure they would be able to implement this change in this fiscal year, and now, on reflection, I’m thinking, oh, well, maybe they had already done so. Maybe they had already spent the money. So it is an area we need to look at with the Finance Committee, and I will be sure to ask Department of Finance officials whether those proposed tax changes have been implemented already, and I will definitely be asking Treasury Board officials if they’re spending Supplementary Estimates (C) money before it’s approved.

In summary, I felt the policy was very concerning and it undermines the authority of Parliament.

I’m going to go ahead now and talk about Parts 2, 3 and 4. Those parts of the bill propose to reduce student debt by waiving interest on the federal portion of Canada Student Loans and Canada Apprentice Loans for the current fiscal year. I spoke briefly to those amendments in my speech at second reading.

The Fall Economic Statement estimates this measure will cost approximately $329 million. To put it into perspective, the Canada Student Loan portfolio at the end of last year — that’s March 31, 2020, because I don’t have the 2021 numbers — was $22 billion, while the Canada Apprentice Loans portfolio was $271 million. Officials from Employment and Social Development Canada testified that they expect write-offs to decrease this year, given the additional support provided by the government in this bill and by other support programs. And I think there are some other support programs outlined in Budget 2021. This should be evident when Parliament requests a supplementary supply bill this year requesting the write-off of student loans. Last year, Parliament approved the write-off of $188 million in Canada Student Loans when it approved the supplementary supply act, Bill C-26, and this is what the National Finance Committee usually focuses on.

I’ve always maintained that there’s another area we haven’t looked at, and we need to look at other write-offs and other amounts forgiven in order to get a complete picture as to what’s happening with the Canada Student Loans portfolio. For example, there was an additional $26 million written off in 2019-20 under the authority of the Financial Administration Act and there was actually $371 million forgiven under the authority of the Canada Student Financial Assistance Act. In the Finance Committee we looked at $188 million, but we never looked at the $371 million that was forgiven under another piece of legislation.

Then, as I say, our Finance Committee historically focuses on Canada Student Loans written off under the authority of appropriation bills, but we need to have a complete picture of the entire portfolio — all of the amounts written off and forgiven — as well as the financial impacts of any additional support programs provided by the government.

I’d like to make a brief comment on Part 5 of the bill. Senator Lankin mentioned it in her speech at second reading. It’s a bit different from the other sections because it’s a regulatory measure. It deals with preventing or alleviating shortages to Canadian food, drugs, devices or cosmetic products and, when passed, it will necessitate individuals and organizations to provide information to the Minister of Health if deemed necessary. Those clauses were initially included in Bill C-13, but that legislation has been rescinded so this amendment will provide the legislative authority on a permanent basis.

I’m now up to Part 6 of the bill. That provides funding for a number of initiatives and they’ve categorized them into three areas. The first is for the Regional Relief and Recovery Fund for the six regional development agencies in the amount of $206 million. We had a lot of discussion on that. It’s a program that started out at $962 million and then it was increased to $1.5 billion in October, and now it was further increased in the Fall Economic Statement to $2 billion. The demand for the program exceeded its availability so it was quite a popular program and the program is not expected to be extended.

The second purpose of Part 6 is to provide funding for a number of health-related programs, including long-term care, mental health and substance abuse, virtual care and medical research. With respect to the funding for long-term care, officials indicated that discussions with the provinces and territories thus far is not tying the funding to long-term care standards. I was somewhat surprised by that comment, which was made at the Finance Committee.

The third purpose of Part 6 requests $500 million for payments of the Canada Emergency Response Benefit, or CERB, as we call it. CERB ended on October 3 of last year and applicants can apply up to December 2. Some legitimate claimants have seen their applications delayed, so the $500 million is supposed to pay for the remaining applications.

Before I finish up, I want to mention to my colleagues that the Parliamentary Budget Officer released a report this morning on Budget 2021. I’m now reading from an article in The Globe and Mail by Bill Curry, which says the Liberal budget underestimates the size of federal deficits, which will lead to decades of higher debt. I just want to indicate that we’ll be tracking those numbers to see which direction they move.

Honourable senators, this concludes my comments at third reading of Bill C-14. Many of these issues will reappear during our study of Budget 2021 and the Budget Implementation Act. I again extend my appreciation to Senator Lankin and to my colleagues on the National Finance Committee for their excellent questions during our meetings, and also to our officials who make these meetings possible during these very difficult times.

Thank you very much.

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.)