Bill C-45 (Historical)

Jobs and Growth Act, 2012

A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures

Part 1 implements certain income tax measures and related measures proposed in the March 29, 2012 budget. Most notably, it
(a) amends the rules relating to Registered Disability Savings Plans (RDSPs) by
(i) replacing the 10-year repayment rule applying to withdrawals with a proportional repayment rule,
(ii) allowing investment income earned in a Registered Education Savings Plan (RESP) to be transferred on a tax-free basis to the RESP beneficiary’s RDSP,
(iii) extending the period that RDSPs of beneficiaries who cease to qualify for the Disability Tax Credit may remain open in certain circumstances,
(iv) amending the rules relating to maximum and minimum withdrawals, and
(v) amending certain RDSP administrative rules;
(b) includes an employer’s contributions to a group sickness or accident insurance plan in an employee’s income in certain circumstances;
(c) amends the rules applicable to retirement compensation arrangements;
(d) amends the rules applicable to Employees Profit Sharing Plans;
(e) expands the eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of bioenergy equipment;
(f) phases out the Corporate Mineral Exploration and Development Tax Credit;
(g) phases out the Atlantic Investment Tax Credit for activities related to the oil and gas and mining sectors;
(h) provides that qualified property for the purposes of the Atlantic Investment Tax Credit will include certain electricity generation equipment and clean energy generation equipment used primarily in an eligible activity;
(i) amends the Scientific Research and Experimental Development (SR&ED) investment tax credit by
(i) reducing the general SR&ED investment tax credit rate from 20% to 15%,
(ii) reducing the prescribed proxy amount, which taxpayers use to claim SR&ED overhead expenditures, from 65% to 55% of the salaries and wages of employees who are engaged in SR&ED activities,
(iii) removing the profit element from arm’s length third-party contracts for the purpose of the calculation of SR&ED tax credits, and
(iv) removing capital from the base of eligible expenditures for the purpose of the calculation of SR&ED tax incentives;
(j) introduces rules to prevent the avoidance of corporate income tax through the use of partnerships to convert income gains into capital gains;
(k) clarifies that transfer pricing secondary adjustments are treated as dividends for the purposes of withholding tax imposed under Part XIII of the Income Tax Act;
(l) amends the thin capitalization rules by
(i) reducing the debt-to-equity ratio from 2:1 to 1.5:1,
(ii) extending the scope of the thin capitalization rules to debts of partnerships of which a Canadian-resident corporation is a member,
(iii) treating disallowed interest expense under the thin capitalization rules as dividends for the purposes of withholding tax imposed under Part XIII of the Income Tax Act, and
(iv) preventing double taxation in certain circumstances when a Canadian resident corporation borrows money from its controlled foreign affiliate;
(m) imposes, in certain circumstances, withholding tax under Part XIII of the Income Tax Act when a foreign-based multinational corporation transfers a foreign affiliate to its Canadian subsidiary, while preserving the ability of the Canadian subsidiary to undertake expansion of its Canadian business; and
(n) phases out the Overseas Employment Tax Credit.
Part 1 also implements other selected income tax measures. Most notably, it introduces tax rules to accommodate Pooled Registered Pension Plans and provides that income received from a retirement compensation arrangement is eligible for pension income splitting in certain circumstances.
Part 2 amends the Excise Tax Act and the Jobs and Economic Growth Act to implement rules applicable to the financial services sector in respect of the goods and services tax and harmonized sales tax (GST/HST). They include rules that allow certain financial institutions to obtain pre-approval from the Minister of National Revenue of methods used to determine their liability in respect of the provincial component of the HST, that require certain financial institutions to have fiscal years that are calendar years, that require group registration of financial institutions in certain cases and that provide for changes to a rebate of the provincial component of the HST to certain financial institutions that render services to clients that are outside the HST provinces. This Part also confirms the authority under which certain GST/HST regulations relating to financial institutions are made.
Part 3 amends the Federal-Provincial Fiscal Arrangements Act to provide the legislative authority to share with provinces and territories taxes in respect of specified investment flow-through (SIFT) entities — trusts or partnerships — under section 122.1 and Part IX.1 of the Income Tax Act, consistent with the federal government’s proposal on the introduction of those taxes. It also provides the legislative authority to share with provinces and territories the tax on excess EPSP amounts imposed under Part XI.4 of the Income Tax Act, consistent with the measures proposed in the March 29, 2012 budget. It also allows the Minister of Finance to request from the Minister of National Revenue information that is necessary for the administration of the sharing of taxes with the provinces and territories.
Part 4 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 4 amends the Trust and Loan Companies Act, the Bank Act, the Insurance Companies Act and the Jobs and Economic Growth Act as a result of amendments introduced in the Jobs, Growth and Long-term Prosperity Act to allow certain public sector investment pools to directly invest in a federally regulated financial institution.
Division 2 of Part 4 amends the Canada Shipping Act, 2001 to permit the incorporation by reference into regulations of all Canadian modifications to an international convention or industry standard that are also incorporated by reference into the regulations, by means of a mechanism similar to that used by many other maritime nations. It also provides for third parties acting on the Minister of Transport’s behalf to set fees for certain services that they provide in accordance with an agreement with that Minister.
Division 3 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things, provide for a limited, automatic stay in respect of certain eligible financial contracts when a bridge institution is established. It also amends the Payment Clearing and Settlement Act to facilitate central clearing of standardized over-the-counter derivatives.
Division 4 of Part 4 amends the Fisheries Act to amend the prohibition against obstructing the passage of fish and to provide that certain amounts are to be paid into the Environmental Damages Fund. It also amends the Jobs, Growth and Long-term Prosperity Act to amend the definition of Aboriginal fishery and another prohibition relating to the passage of fish. Finally, it provides transitional provisions relating to authorizations issued under the Fisheries Act before certain amendments to that Act come into force.
Division 5 of Part 4 enacts the Bridge To Strengthen Trade Act, which excludes the application of certain Acts to the construction of a bridge that spans the Detroit River and other works and to their initial operator. That Act also establishes ancillary measures. It also amends the International Bridges and Tunnels Act.
Division 6 of Part 4 amends Schedule I to the Bretton Woods and Related Agreements Act to reflect changes made to the Articles of Agreement of the International Monetary Fund as a result of the 2010 Quota and Governance Reforms. The amendments pertain to the rules and regulations of the Fund’s Executive Board and complete the updating of that Act to reflect those reforms.
Division 7 of Part 4 amends the Canada Pension Plan to implement the results of the 2010-12 triennial review, most notably, to clarify that contributions for certain benefits must be made during the contributory period, to clarify how certain deductions are to be determined for the purpose of calculating average monthly pensionable earnings, to determine the minimum qualifying period for certain late applicants for a disability pension and to enhance the authority of the Review Tribunal and the Pension Appeals Board. It also amends the Department of Human Resources and Skills Development Act to enhance the authority of the Social Security Tribunal.
Division 8 of Part 4 amends the Indian Act to modify the voting and approval procedures in relation to proposed land designations.
Division 9 of Part 4 amends the Judges Act to implement the Government of Canada’s response to the report of the fourth Judicial Compensation and Benefits Commission regarding salary and benefits for federally appointed judges. It also amends that Act to shorten the period in which the Government of Canada must respond to a report of the Commission.
Division 10 of Part 4 amends the Canada Labour Code to
(a) simplify the calculation of holiday pay;
(b) set out the timelines for making certain complaints under Part III of that Act and the circumstances in which an inspector may suspend or reject such complaints;
(c) set limits on the period that may be covered by payment orders; and
(d) provide for a review mechanism for payment orders and notices of unfounded complaint.
Division 11 of Part 4 amends the Merchant Seamen Compensation Act to transfer the powers and duties of the Merchant Seamen Compensation Board to the Minister of Labour and to repeal provisions that are related to the Board. It also makes consequential amendments to other Acts.
Division 12 of Part 4 amends the Customs Act to strengthen and streamline procedures related to arrivals in Canada, to clarify the obligations of owners or operators of international transport installations to maintain port of entry facilities and to allow the Minister of Public Safety and Emergency Preparedness to require prescribed information about any person who is or is expected to be on board a conveyance.
Division 13 of Part 4 amends the Hazardous Materials Information Review Act to transfer the powers and functions of the Hazardous Materials Information Review Commission to the Minister of Health and to repeal provisions of that Act that are related to the Commission. It also makes consequential amendments to other Acts.
Division 14 of Part 4 amends the Agreement on Internal Trade Implementation Act to reflect changes made to Chapter 17 of the Agreement on Internal Trade. It provides primarily for the enforceability of orders to pay tariff costs and monetary penalties made under Chapter 17. It also repeals subsection 28(3) of the Crown Liability and Proceedings Act.
Division 15 of Part 4 amends the Employment Insurance Act to provide a temporary measure to refund a portion of employer premiums for small businesses. An employer whose premiums were $10,000 or less in 2011 will be refunded the increase in 2012 premiums over those paid in 2011, to a maximum of $1,000.
Division 16 of Part 4 amends the Immigration and Refugee Protection Act to provide for an electronic travel authorization and to provide that the User Fees Act does not apply to a fee for the provision of services in relation to an application for an electronic travel authorization.
Division 17 of Part 4 amends the Canada Mortgage and Housing Corporation Act to remove the age limit for persons from outside the federal public administration being appointed or continuing as President or as a director of the Corporation.
Division 18 of Part 4 amends the Navigable Waters Protection Act to limit that Act’s application to works in certain navigable waters that are set out in its schedule. It also amends that Act so that it can be deemed to apply to certain works in other navigable waters, with the approval of the Minister of Transport. In particular, it amends that Act to provide for an assessment process for certain works and to provide that works that are assessed as likely to substantially interfere with navigation require the Minister’s approval. It also amends that Act to provide for administrative monetary penalties and additional offences. Finally, it makes consequential and related amendments to other Acts.
Division 19 of Part 4 amends the Canada Grain Act to
(a) combine terminal elevators and transfer elevators into a single class of elevators called terminal elevators;
(b) replace the requirement that the operator of a licensed terminal elevator receiving grain cause that grain to be officially weighed and officially inspected by a requirement that the operator either weigh and inspect that grain or cause that grain to be weighed and inspected by a third party;
(c) provide for recourse if an operator does not weigh or inspect the grain, or cause it to be weighed or inspected;
(d) repeal the grain appeal tribunals;
(e) repeal the requirement for weigh-overs; and
(f) provide the Canadian Grain Commission with the power to make regulations or orders with respect to weighing and inspecting grain and the security that is to be obtained and maintained by licensees.
It also amends An Act to amend the Canada Grain Act and the Agriculture and Agri-Food Administrative Monetary Penalties Act and to Repeal the Grain Futures Act as well as other Acts, and includes transitional provisions.
Division 20 of Part 4 amends the International Interests in Mobile Equipment (aircraft equipment) Act and other Acts to modify the manner in which certain international obligations are implemented.
Division 21 of Part 4 makes technical amendments to the Canadian Environmental Assessment Act, 2012 and amends one of its transitional provisions to make that Act applicable to designated projects, as defined in that Act, for which an environmental assessment would have been required under the former Act.
Division 22 of Part 4 provides for the temporary suspension of the Canada Employment Insurance Financing Board Act and the dissolution of the Canada Employment Insurance Financing Board. Consequently, it enacts an interim Employment Insurance premium rate-setting regime under the Employment Insurance Act and makes amendments to the Canada Employment Insurance Financing Board Act, the Department of Human Resources and Skills Development Act, the Jobs, Growth and Long-term Prosperity Act and Schedule III to the Financial Administration Act.
Division 23 of Part 4 amends the Canadian Forces Superannuation Act, the Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act and makes consequential amendments to other Acts.
The Canadian Forces Superannuation Act is amended to change the limitations that apply in respect of the contribution rates at which contributors are required to pay as a result of amendments to the Public Service Superannuation Act.
The Public Service Superannuation Act is amended to provide that contributors pay no more than 50% of the current service cost of the pension plan. In addition, the pensionable age is raised from 60 to 65 in relation to persons who become contributors on or after January 1, 2013.
The Royal Canadian Mounted Police Superannuation Act is amended to change the limitations that apply in respect of the contribution rates at which contributors are required to pay as a result of amendments to the Public Service Superannuation Act.
Division 24 of Part 4 amends the Canada Revenue Agency Act to make section 112 of the Public Service Labour Relations Act applicable to the Canada Revenue Agency. That section makes entering into a collective agreement subject to the Governor in Council’s approval. The Division also amends the Canada Revenue Agency Act to require that the Agency have its negotiating mandate approved by the President of the Treasury Board and to require that it consult the President of the Treasury Board before determining certain other terms and conditions of employment for its employees.

Jobs and Growth Act, 2012

[Scott Reid, Conservative, Lanark—Frontenac—Lennox and Addington, ON]

Mr. Speaker, there is a lot to talk about in this budget but I will have to say it all in 10 minutes rather than 20 minutes. My colleague for Ottawa—Vanier suggests this might be bad news for me but good news for him. I always appreciate his thoughtful commentary on such matters.

I want to start by picking up on the point that my hon. colleague was making a moment ago in his response to a question. I have to say that I disagree with him somewhat. He complained that the budget bill is very large, as he was waving a copy of the budget, which is also very large. It is reasonable to expect that a meaty budget would produce a meaty and detailed piece of legislation.

Although I suspect a few of my constituents sit down and read most legislation cover to cover, I think that sometimes there is a tendency to expect that Canadians will not actually read the budget implementation act and that they will take it on faith that a very large bill is somehow inappropriate.

I want to point out that the nature of the many small detailed adjustments that are being made to government spending require a certain amount of space. To make this point, I will turn to Bill C-45 on page 228, which deals with pay for judges under the Judges Act. It deals with the salaries for every federally appointed and paid judge in the country, starting with the Chief Justice of Canada. It includes a series of amendments to the Judges Act because these salaries are legislated. Members would understand why we would not want to have judges salaries be discretionary, which is in order to preserve the independence of the judiciary. I will just read a bit of this to give a sense of why there is so much volume in this act.

210. Sections 9 to 22 of the Judges Act are replaced by the following:

9. The yearly salaries of the judges of the Supreme Court of Canada are as follows:

(a) the Chief Justice of Canada, $370,300; and

(b) the eight puisne judges, $342,800 each.

Puisne judges here are what we call associate justices. By the way, what has changed from the current Judges Act is that the actual numbers are changed because of salary increases from the current level.

It goes on:

10. The yearly salaries of the judges of the Federal Courts are as follows:

(a) the Chief Justice of the Federal Court of Appeal, $315,900;

(b) the other judges of the Federal Court of Appeal, $288,100 each;

(c) the Chief Justice of the Federal Court, $315,900; and

(d) the other judges of the Federal Court, $288,100 each.

11. The yearly salaries of the judges of the Tax Court of Canada are as follows:

(a) the Chief Justice, $315,900;

(b) the Associate Chief Justice, $315,900; and

(c) the other judges, $288,100 each.

It then goes on for every single provincial court, starting with Ontario, Quebec, Nova Scotia and finally getting to the Supreme Court of the Northwest Territories, which is the very last one several pages on.

They all have different salary levels currently and we want to have them go up proportionately. There is no other way of doing this than by laying the text out in this manner and it takes a certain amount of space, which is typical of the kind of content we find in this budget implementation act. It is detailed, thoughtful, methodical and, by necessity, takes up space.

This is not, as some members of the opposition have suggested, the budget version of Marcel Proust's In Search of Lost Time. This is actually a very reasonable, methodical, practical way of dealing with the very complex business of managing a country's national government's expenditures.

The main theme of the bill is bringing practical restraint after years of expanding government budgets. Of course, these were the expansions in the government's budget that took place in the wake of the financial meltdown of 2008.

At that time, the argument was made very forcefully by the opposition that the government must spend more money on stimulus. Indeed, in early 2009, the government was told that it must spend more money on stimulus and go into deficit, since there was no way of spending more money when revenues were at the levels they were at then.

We were told we must do that as a condition of them not defeating us and replacing us as the government without an intervening election. That was the deal. While the budgets passed by our government in its minority period were not supported by the opposition, the opposition's criticism at the time was based on us not spending enough. We should be clear about that.

Now we are downsizing, or one might say re-sizing, from that expenditure. I am not a Keynesian. I do not think that is the appropriate way of dealing with a financial downturn. However, if one does believe in Keynesianism, as the opposition does and indeed many colleagues on this side do as well, then this is what Keynesians do when an economy is not contracting but expanding. They cut spending, do not increase taxes and try to build up the financial work chest that may be needed for some future financial crisis. It is at times of financial crisis when the economy is contracting that a government engages in stimulus spending. This is part of that cycle.

As I said, I am not a Keynesian, but I do believe in the part about trying to keep government spending reasonable and under control. I also believe in the general approach the government has adopted, which is making small adjustments here and there across that vast scale of government expenditures, rather than simply making radical, dramatic cuts.

That approach has been tried. Indeed, it was tried by the Chrétien government and by Paul Martin when he was finance minister back in the mid 1990s. I remember the budget of 1995 very well. I was a staffer on Parliament Hill at the time. Canada had a very substantial deficit at the time. We were heading into a situation where we could potentially face a lenders' strike. The government's response was to cut spending, which I applaud.

The way it cut spending was not approved of by the former Reform Party and PCs, and that was to cut transfers to provinces radically. It left all federal spending on direct expenditures intact, which was politically sensitive, but it cut radically on the transfers to the provinces. This had the effect of nailing the provinces on their primary expenditures: health care and education. These are the two areas that Canadians consistently indicate are the most important areas of spending to them. That had a very serious negative impact on the provinces.

Our government has tried to avoid harming transfers to the provinces. A very stable foundation of funding, both for equalization and for direct health care transfers has now been secured several years into the future. The adjustments that are being made are to direct federal expenditures. These are, naturally, very many because there are so many different areas in which our government engages in spending. There is everything from soup to nuts, from national defence to protecting the environment. It covers a lot of ground.

Much of that spending is non-discretionary. It is put in place by statute, which means the statutes must be adjusted. The example I just gave of the Judges Act is a typical example of the kinds of adjustments that are made to a statutory expenditure requirement. We have to go through and deal with it in detail. It takes up space and inevitably creates a substantial bill.

Frankly, that is why we needed to have more than one budget implementation bill. We had one in the spring and as promised one in the autumn to deal with that very substantial amount of work and to give the time in the intervening period for the kind of work that requires detailed thought on the part of ministers to achieve the goal of having reasonable expenditure adjustments that do not cause harm to the interests of Canadians.

I have just one last example. It involves my own constituency. As all good MPs do, I want to wrap things up by talking about my own constituency.

One area of cuts that we faced was an adjustment to the canals budget of Parks Canada, which is administered through the ministry of the environment. It had an overall adjustment to its budget downwards of $29 million, of which $2 million would affect the Rideau Canal system. It is Ontario's only world heritage site and an area of considerable cultural and recreational importance.

The initial approach adopted by Parks Canada was to try to achieve at least part of that cut by reducing the season. When that met with concerns, the minister intervened personally. A number of MPs drew this concern to his attention. That included MPs from more than one party because the canal flows through both Conservative and Liberal-held ridings, and I think even an NDP-held riding.

The result was that reasonable changes were made to ensure the season could remain its full length. The part of the budget that was most important to local Canadians was respected. The result is a change that saves money and at the same time allows for a reasonable and intelligent expenditure of those funds.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, I am certain that the hon. member who just concluded his speech is as frustrated as we are to see his time limited to 10 minutes, as he would have liked to say even more good things about this budget. Our position is the complete opposite. We are concerned because we believe that the Conservatives will be saddling future generations with the greatest economic, social and ecological debt ever.

I would like my colleague to answer this question: how can a government that wants to create jobs and prosperity reach these goals by bringing forward an austerity budget? Great Britain tried that approach, and analysts now find that the recession is continuing.

Can he demonstrate, in just a few seconds, that this austerity budget will really get us out of the recession?

[Scott Reid, Conservative, Lanark—Frontenac—Lennox and Addington, ON]

Mr. Speaker, if we go into the future and continue to build up a very substantial national debt, we must remember that every year's deficit gets added to the national debt. We cannot keep doing that year after year, as we did during the first years of the recession. From a purely economic point of view, the recession is actually over in Canada. It continues to exist elsewhere.

If we had gone on and continued to build the national debt, which I think would be the inevitable result if the NDP were actually carrying out what they proposed, the result would be a massive debt faced in the future by people like myself when we retire and by our children when they enter the workforce. That, when it is put in combination with the very substantial obligations that we face paying old age security, Canada pension plan and the very substantial health benefits that will go to seniors, would have the effect of creating an unsustainable burden on taxpayers.

In the end, services including life-saving services such as health care would inevitably be cut. Pensions might very well be cut in practice, if not nominally, through the government inflating its way out. I think that is the solution many European countries will adopt and it is a very unwise solution.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Mr. Speaker, I certainly give accolades to my colleague. It should be noted that I am very familiar with my colleague as we are in adjoining ridings. I not only see his contribution nationally and internationally through all of his good work, but I consistently see the results he delivers for his riding. I am honoured to have him as a colleague and to work with him for the benefit of our communities.

The member made one particular comment that I wonder if could expand on. He mentioned Keynesian economics. Keynesian economics, as we all know, is very simple. It is called “spend, spend, spend”. It is about how fast people can spend themselves out of a problem. In reality we all know it does not and has not worked. For the official opposition, I suppose that would be in the top ranks of its philosophy, tax and spend, tax and spend. The leader of the third party was with a government that adopted that in Ontario to the highest degree.

Perhaps the hon. member could give us some history on the effects of Keynesian economics and tell us how dastardly that would unfold for Canada?

[Scott Reid, Conservative, Lanark—Frontenac—Lennox and Addington, ON]

Mr. Speaker, first of all, the current leader of the Liberal Party did indeed try practising this kind of economics with disastrous results in Ontario. The father of the future leader of the Liberal Party did the same thing federally. We had to suffer years of deficits as a result of that.

Theoretical Keynesian economics, as written by Lord Keynes, was a system in which governments would spend substantially, run deficits in hard times, and then would run substantial surpluses and collect the funds necessary for the next crisis in good times.

That is not the way it works in reality. The incentive for politicians to spend more and not raise taxes, at all times, results in impractical Keynesian economics. It results in the kind of stagflation that has large deficits that are dealt with through inflation, which destroys growth prospects as we saw in the 1970s.

I would very much like to say that, as a rule, it should be avoided and we should simply try to practice good housekeeping at all times.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, Canada has to create a climate that encourages investment and innovation, a stable, predictable economic climate that inspires confidence in entrepreneurs and will enable us to stimulate innovation. We have to create good, high value-added jobs and develop our vast natural resources responsibly to create a more prosperous, greener and more just society. To do that, we have to provide competent management of the economy and government.

Whether the issue is the criteria that guide the review of takeovers of our natural resources or the budget implementation act, the government is sowing uncertainty and doubt where predictability should prevail. The private sector is now used to receiving an annual budget in March that does not even bother to announce the actual initiatives the government intends to bring in. For the rest of the year, we get three omnibus bills that are unrelated to the budget document, into which the government tosses all its dirty laundry and the bills it does not have the courage to defend in the House of Commons, let alone before parliamentary committees. This is not a climate that inspires confidence.

In this monstrosity of a bill, which is even bigger than the budget was, the opposition is particularly concerned about the nearly $500 million cut to support for research and development in the private sector. Cuts to scientific research and experimental development tax credits are of particular concern to the private sector. These arbitrary cuts exacerbate the problems our manufacturing sector is already suffering, fragile as it is as a result of our high dollar. They threaten the climate of certainty that encourages investment and good job creation in Canada, in Quebec and in my riding, LaSalle—Émard, where manufacturing is an important economic activity.

The budget reduces the 20% general R and D tax credit to 15% for the big corporations that do most of the R and D in Canada.

In a letter to the Minister of Finance, the Canadian Manufacturers & Exporters wrote:

The reduction of the ITC rate will impact the ability of Canadian divisions of multinational corporations to attract global R and D mandates in Canada and will require Canadian headquartered companies to examine outsourcing R and D as a more cost-effective way of driving innovation and productivity....Unfortunately, the signal that the proposed SR&ED changes send are two-fold: (1) Canada does not value or welcome large R and D mandates; and, (2) companies with large R and D projects should look elsewhere in the future. Large R and D projects, affiliated with existing manufacturing operations, are the prime driver of innovation and commercialization in Canada. While it is true that many enterprises will continue to invest in R and D, the proposed changes to the SR&ED program mean that those investments are much less likely to be placed in Canada.

The government has also cut the payroll expenses that companies can claim instead of making detailed claims by 10%. But what is of greater concern is that the government has decided to reduce the tax credit for eligible capital expenditures.

On this last point, the Canadian Manufacturers & Exporters told the Minister of Finance:

Eliminating capital expenditures from eligible expenses will significantly and negatively impact the largest users of SR&ED – Canada's manufacturing sector – which is much more capital intensive than other sectors...it will have a much broader impact on the ability to retain and attract investment in Canada. Some manufacturers may continue to invest in R and D and carry additional costs, other companies will simply move the R and D to other jurisdictions where overall R and D costs are lower, providing a greater return on these investments. This will further undermine Canada’s innovation and commercialization performance.

This is extremely alarming, coming from the association representing a sector that employees nearly two million Canadians and generates $166 billion or 14% of our GDP. The manufacturing sector also does 45% of R&D in Canada and employs nearly 6,000 people in my riding, La Salle—Émard.

The artificially high value of our dollar is hurting our exports and our manufacturing sector. Quebec lost 70,000 jobs in the first three months of 2012, 8,000 of which were in the manufacturing sector.

Over the last decade, the share that the Canadian manufacturing sector contributes to our country's GDP has fallen by 2%. That decline has been felt especially in the lumber and pulp and paper processing industry, but also in the fishing industry. Between 2002 and 2011, the value of Canadian exports produced by the manufacturing sector fell by $20 billion. We are paying the price for a dollar that is too high.

The ill-conceived cuts to R&D tax credits will also be a drain on the profitability and competitiveness of the aerospace industry, an industry that is of vital importance to metropolitan Montreal and to Quebec. R&D cycles in that industry are counted not in months and years, but in decades.

The costs are astronomical, the financial risk is high, competition is fierce, and the margin of error is zero. This sector must be able to rely on financial certainty and long-term federal assistance. Federal tax credits for research and development are the only federal instrument that can provide this long-term certainty.

I spent the last few weeks of the summer visiting aerospace facilities in the Montreal area. In Quebec alone, the aerospace industry employs over 70,000 workers and provides economic spinoffs worth nearly $20 billion. This is no reason to rest on our laurels. The aerospace sector is rapidly developing in emerging economies. In Canada, in Quebec, our industry has reached a crossroads and needs leadership.

We must be able to provide financial certainty through government programs that support research and development in order to create greener, quieter devices. We need to introduce tools that help businesses put their ideas to the test before they reach the marketing stage, so that we can finally bridge the “valley of death”.

We must ensure that businesses operating in Canada enjoy the same opportunities as their foreign competitors in terms of federal procurement programs and calls for tenders.

While I may have jumped ahead of the release of the Emerson report on the future of the aerospace industry and begun a direct dialogue with businesses in that sector, I did so because the NDP is an engaged partner, one that listens. Once again, what we are hearing is that the industry is looking for partners, certainty and a long-term vision for our economy.

The Conservatives have reinvested only part of the savings from the scientific research and experimental development program in direct support programs. Entrepreneurs are being shortchanged $400 million. This is bad for innovation and bad for the economy.

Canadian manufacturers are saying that the government underestimated the cost to businesses by $250 million. The scientific research and experimental development program, or SR&ED, is an important tool in the planning of major sectors of our economy. Once again, the Conservatives are not fostering a predictable climate for R&D investments. This is bad for our economy.

The NDP supports sustainable economic development that is built on the creation of skilled, value-added jobs and the responsible development of our natural resources. Together, we can create a more prosperous, greener and more just society for all Canadians.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I will start by saying that I am deeply disappointed that we are being muzzled. This shows, unfortunately, how spineless the government is. I congratulate my colleague from LaSalle—Émard for her speech and for her endless dedication to hounding the Minister of Industry for all his shortcomings and inadequacies.

I used to sit on the Standing Committee on International Trade, where I witnessed how incredibly naive the government can be when it comes to fostering Canada's competitiveness and its ability to achieve its rightful place in international trade.

I would like to talk about research and development. Could my colleague tell us about the ridiculous waste of funding, from public funds and other sources? Could she tell us about the results Canada's research and development community is expected to deliver? According to some studies, results in that area are truly dismal.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, I thank my colleague for his question.

We see that expectations related to research and development are complex and ongoing. It is important to realize that we should not stop investing in research and development when the economy is fragile. But that is exactly what the government is doing now. It takes pride in talking about innovation, but it is withdrawing from research and development. I find that very unfortunate.

The House resumed consideration of the motion that Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, be read the second time and referred to a committee.

[Pierre Lemieux, Conservative, Parliamentary Secretary to the Minister of Agriculture]

Mr. Speaker, it is a great honour and privilege for me to rise in the House and speak about jobs and growth as they relate to our budget 2012. Bill C-45 is a continuation of our road map for economic success.

Canada leads the way as a stable financial leader, one of the strongest among the G7. Canada is a better place to do business. In fact, it is outperforming the United States and most countries around the world. Our lower taxes make it possible for businesses to create jobs, especially in these difficult times.

Speaking of creating jobs, the budget measures being debated this week do just that. Our government intends to renew the hiring credit through the act for yet another year. As I heard from business owners in my riding, the hiring credit is very important for job creation. However, the opposition does not support our budget and would therefore vote against this important hiring credit, which has helped local businesses in my riding of Glengarry—Prescott—Russell and a total of 534,000 employers across Canada last year.

Budget 2012 and the hiring credit rewards those who create jobs. That is particularly important in a rural riding such as mine. If we want people to move their families into rural areas and to remain in rural areas, we must ensure that there are existing jobs and, of course, many new jobs.

Often, people forget that farms are important businesses in the rural areas. In my rural riding, we have a high volume of agricultural businesses. I have heard from the farming community that the hiring credit is particularly good news for farm operations that are looking to expand.

Everyone knows how essential stable businesses are to the prosperity of both urban and rural communities. Not only are they a source of income for Canadian workers, they also deliver indispensable products and services which, in turn, fuel economic growth. What is more, they ensure workers can feed their families.

With budget 2012, the Conservative government continues to support families and small businesses. The extension of the hiring credit is only the tip of the iceberg. Indeed, our budget contains several more measures to help taxpayers save money. I sincerely hope opposition members will acknowledge the benefits our budget has in store for ordinary Canadians.

One important measure in Bill C-45 that will help Canadians save for retirement is the implementation of a tax framework for pooled registered pension plans.

Conservatives are committed to helping Canadians save for their retirement, especially Canadians who do not have access to pension plans. Our framework provides a viable retirement savings option for those Canadians who currently do not have access to a workplace pension plan.

Pension plans are an important investment for Canadians to have, and they deserve quality options like the pooled registered pension plan when it comes to saving for the future. This is one of the many reasons the opposition should be supporting Bill C-45.

We also want to support Canadians with severe disabilities and their families by improving the registered disability savings plan. The RDSP is widely regarded as a major policy innovation and positive development in helping to ensure the long-term financial security of children with severe disabilities. It is an initiative delivered by our Conservative government.

The improvements in our budget are the result of extensive consultation with Canadians. Consultations were held with representatives of disability groups, financial institutions, and provincial and territorial governments, including public guardians and trustees. Based on their feedback, a number of positive changes are being proposed that would improve the current system for families with members with disabilities.

Many of us know the great physical, emotional and financial toll that living with a disability can have on families, as they struggle to make their homes and their environment safer and more accessible and to build a better future for themselves. Financial assistance is crucial to them. Our support reflects the government's understanding of the needs of Canadians living with disabilities.

Tax reductions reward Canadians for realizing their full potential and give individuals and families the flexibility to make the choices that are right for them. I must point out that this has been a strong trend within our Conservative government.

In total, our government has introduced more than 140 tax relief measures since 2006. As a result, the average family of four in Canada is saving more than $3,100 per year in taxes. Seniors and pensioners are receiving about $2.5 billion in targeted tax relief for 2012-13 fiscal year. Due to the measures taken since 2006, more than one million low-income Canadians, including about 380,000 seniors, have been removed from the tax rolls as of 2012. The federal tax burden for all Canadians is now the lowest it has been in 50 years.

It is through the implementation of further measures included in our jobs and growth act that we would keep taxes low for families and individuals. I would simply must point out here that in the House we are the only party that advocates for low taxes for Canadians.

As the parliamentary secretary for agriculture, I regularly sit down with farmers from across Canada.

Since 2006, the Conservative government has been working hard on behalf of farmers. Thanks to the hard work and diligent efforts of the Minister of Agriculture, the Canadian agricultural sector is now much stronger, which has greatly benefited farmers.

As parliamentary secretary and as a member of Parliament representing a riding that has many farmers, I have seen with my own two eyes the results of Conservative agricultural programs over the past six years. In our 2012 budget, we will certainly continue to support farmers.

Our government was elected by farmers on a platform to modernize the grain sector in Canada and to keep our economy strong. We have brought in marketing freedom. The next step is to renew the Grain Commission. This has not been done in 40 years. Now, it is definitely time to remove the red tape and unnecessary expenses for our farmers. The changes in the act would eliminate about $20 million in unnecessary costs from the grain handling system, costs that are ultimately passed down to farmers.

Our Conservative government is doing everything it can to reduce costs for all Canadians. For instance, although it was supposed to be debated this week, along with all the other great measures in our jobs and growth act, the changes that we proposed to our MP pension plan have already passed with the support of all parties.

I will take this opportunity to highlight the importance of the approved changes for the Canadian taxpayer, as these are part of our 2012 budget.

It is worth noting that Canadians know the importance of living within their means and that they expect the government MPs and public servants to do the same. That is why the government is committed to managing public finances in a sustainable and responsible way and why we are willing to set an example.

In this five-year period, the portion of premiums paid by the members will go from 14% to 50%, on a 50:50 cost-sharing basis. This means that, come 2017, the premiums paid by members into their pension plans will rise to over $38,000, from $11,000.

This will result in significant savings for taxpayers. What is more, as we all know, the age at which plan members can begin to collect a full pension will also be raised, from age 55 to age 65, beginning in 2016.

This is good news for taxpayers, as we have all agreed.

In addition, public service employees will go from paying 37% of their pensions to 50% by 2017. The age of retirement for new federal workers will also increase, from 60 to 65 years of age. These important changes will not only ensure that the public sector and MPs are paying their fair share, but will also result in billions of dollars in savings. By 2017, the changes to MP pensions and the 420,000 strong public sector pension regime will bring total cumulative savings of $2.6 billion in taxpayer dollars.

I urge the opposition to view the other budget measures that we have drafted with as much energy and support as they did for the changes to the pension plans.

We need to keep our country on the right track of full economic recovery, and that is what our budget would do.

In summary, the budget is great news for my constituents. It is great news for all Canadians. It is a clear road map for economic success. Making decisions during challenging economic times involves making tough choices. I can assure members that our decisions are carefully considered and carefully made, with the priorities and the well-being of Canadians at the forefront.

I urge the opposition to stop playing games with Canadians and the economy and to support the swift passage of this legislation.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Mr. Speaker, the member for the riding neighbouring mine talked about businesses and farmers. He will know that when budgets are tabled in the House, businesses look eagerly at them to see an economy's direction.

Earlier today, my NDP colleague mentioned about $500 billion in debt money that was not being invested. The October 6 issue of The Economist said that the government's focus on one sector of natural resources, oil and gas in particular, had caused investors to invest in storage and transport rather than machinery and equipment, which could lead to productivity gains.

Growth is slowing. We are 152nd. We in the NDP proposed that small businesses have a 9% tax rate. The Conservatives have not gone far enough. They have only lowered it to 11% for small businesses. The uncertainty being proposed by the Conservatives is causing investors not to know where to put their money. It is causing oil and gas companies to have problems promoting their projects because we have reduced regulatory burden.

As the member will know, the number nine pipeline passes across his territory. With uncertainty in this market, how will the member's citizens know that the government is overseeing this project properly and how will investors know where to invest their money with this sort of convoluted budget that has been created?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, it is an interesting question because it ignores the fact that right now Canada has one of the strongest economies in the world. This is recognized by countries around the world.

The member is asking for lower tax rates. That is exactly what we did in previous budgets. We lowered the business tax rate for small, medium and large businesses. The member and his party voted against all of that. They also voted against tax savings for Canadians, seniors, children involved in sports and the list could go on.

Our businesses are contributing to the healthy economy in Canada and although the economy is strong, it can be affected by external forces. I will conclude with some proof of how our businesses are helping our economy. Over 800,000 net new jobs have been created in Canada since 2009 and that is attribute to our economic policies and to the businesses that hire Canadians.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I listened to the speech and I have read the budget and the budget implementation act. What seems to be missing is a promise from the 2008 Conservative platform. On page 23 of this platform, it says, “A re-elected Conservative Government led by Stephen Harper will prevent any company from exporting raw bitumen”.

Could the member tell us if we might be—

[The Acting Speaker, Conservative, Barry Devolin]

Before I go to the parliamentary secretary, I just remind all hon. members not to use the names of other members in the chamber, even if they are quoting.

The hon. parliamentary secretary.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, once again, I remind the House and Canadians that the member and his party voted against that budget. That budget passed with no thanks to the opposition.

That budget played a key role in the economic strength Canada enjoys today, and I think Canadians see that. Although they are optimistic about Canada's economy and its strength, they know we can be affected by what goes on in other countries. The budget bill in front of the House right now would be another step in the right direction toward fortifying our economy in Canada. I just wish the member and his colleagues would vote in favour of these economic policies that would make Canada even stronger.