Bill C-86 (Historical)

Budget Implementation Act, 2018, No. 2

A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures

Part 1 implements certain income tax and related measures by
(a) introducing rules intended to provide greater certainty with respect to various tax consequences arising from certain foreign divisive reorganizations;
(b) ensuring that the existing cross-border anti-surplus stripping rule cannot be circumvented through transactions involving the use of partnerships or trusts;
(c) introducing rules to prevent misuse of the foreign accrual property income regime through the use of tracking interests involving foreign affiliates;
(d) ensuring consistency between the trading or dealing in indebtedness rules and the investment business rules within the foreign accrual property income regime;
(e) ensuring that the at-risk rules apply appropriately at each level of a tiered partnership structure;
(f) providing that the Minister of Public Safety and Emergency Preparedness can determine international operational missions for the purpose of the deduction available for income earned by members of the Canadian Forces or police officers on such missions;
(g) amending the synthetic equity arrangement rules and securities lending arrangement rules to prevent the artificial generation of losses through the use of equity-based financial instruments;
(h) ensuring that social assistance payments under certain programs do not preclude individuals from receiving the Canada Child Benefit;
(i) ensuring that an individual who is eligible to receive the Canada Workers Benefit can receive the benefit without having to claim it;
(j) introducing a refundable tax credit for the purposes of the climate action incentive;
(k) providing allocation rules for losses applied against Part IV taxes;
(l) preventing the creation of artificial losses on shares held as mark-to-market property by financial institutions;
(m) revising the rules relating to the non-partisan political activities of charities;
(n) ensuring that a taxpayer is subject to a three-year extended reassessment period in respect of any income, loss or other amount arising in connection with a foreign affiliate of the taxpayer;
(o) providing the Canada Revenue Agency with an extended reassessment period of an additional three years, to the extent that the reassessment relates to the adjustment of a loss carryback for transactions involving a taxpayer and non-resident non-arm’s length persons;
(p) extending the reassessment period of a taxpayer by the period of time during which a requirement for information or compliance order is contested;
(q) requiring that information returns in respect of a taxpayer’s foreign affiliates be filed within 10 months after the end of the taxpayer’s taxation year;
(r) enabling the disclosure of taxpayer and other confidential tax information to Canada’s bilateral mutual legal assistance treaty partners for the purposes of non-tax criminal investigations and prosecutions of certain serious crimes; and
(s) providing a deduction for employee contributions to the enhanced portion of the Quebec Pension Plan.
Part 1 also amends the Mutual Legal Assistance in Criminal Matters Act to, among other things, define the term “agreement” as applying, among other things, to tax information exchange agreements and tax treaties to which Canada is a party, and provide for orders to produce financial information for the purposes of investigation and prosecution of certain offences set out in subsection 462.‍48(1.‍1) of the Criminal Code. The enactment also amends paragraph 462.‍48(2)‍(c) of the Criminal Code to provide that information may also be gathered under Part IX of the Excise Tax Act and under the Excise Act, 2001.
Part 2 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by
(a) replacing the requirement that GST/HST be collected on a sale of carbon emission allowances with a requirement that the purchaser self-assess that GST/HST;
(b) extending the assessment period for group registered education savings plan trusts that make a special relieving election in respect of their past HST liability;
(c)  introducing GST/HST rules in respect of investment limited partnerships;
(d) clarifying the intended tax policy of excluding books that are sold by a public service body from the GST/HST rebate for printed books;
(e) introducing amendments similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested; and
(f)  introducing amendments similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes.
Part 3 implements certain excise measures by
(a) broadening the refund regime in respect of excise tax on diesel fuel to allow a vendor to apply for a refund where a purchaser will use excise tax-paid diesel fuel to generate electricity, if certain conditions are met;
(b) introducing an anti-avoidance excise measure relating to the taxation of cannabis in respect of the rules establishing the value of a cannabis product on which an ad valorem duty is calculated;
(c)  introducing amendments to the Air Travellers Security Charge Act and the Excise Act, 2001 that are similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested;
(d) introducing amendments to the Excise Act, 2001 that are similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes; and
(e) making housekeeping amendments to the Excise Act, 2001 in order to ensure consistency between the English and French version of the legislation.
Part 4 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 4 amends the Customs Tariff in order to simplify it and reduce the administrative burden for Canadian businesses and the Government of Canada by consolidating similar tariff items that have the same tariff rates and removing end-use provisions where appropriate. The amendments also clarify existing tariff provisions and make other technical amendments.
Division 2 of Part 4 amends the Canada Pension Plan to modify the calculation of the amount to be attributed for a year in which a contributor is a family allowance recipient and their first or second additional contributory period begins or ends.
Subdivision A of Division 3 of Part 4 amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things,
(a) establish thresholds below which the acquisition of control of certain entities, or the acquisition or increase of a substantial investment in them, does not require the approval of the Superintendent of Financial Institutions;
(b) allow financial institutions to invest in the Canadian business growth fund; and
(c) ensure that customers can provide consent electronically to receive electronic documents.
It also corrects a reference to the Insurance Companies Act in the Budget Implementation Act, 2018, No. 1.
Subdivision B of Division 3 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things,
(a) make technical amendments to clarify the method of calculating insured deposits, to remove outdated references, to repeal certain provisions not yet in force and to clarify that withdrawals made following the amalgamation of two or more member institutions or the continuance as a federal credit union will be considered to be made from pre-existing deposits and that the separation of accounts following the amalgamation is limited to a period of two years;
(b) exclude amounts borrowed by the Canada Deposit Insurance Corporation under paragraph 60.‍2(2)‍(c) of the Financial Administration Act from the calculation of the Corporation’s total principal indebtedness; and
(c) clarify that the liquidator of a member institution of the Canada Deposit Insurance Corporation must not apply the law of set-off or compensation to a claim related to insured deposits.
It also repeals two sections of the Financial System Review Act.
Subdivision C of Division 3 of Part 4 amends the Office of the Superintendent of Financial Institutions Act, the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things, clarify that providing legally privileged information to the Superintendent of Financial Institutions does not constitute a waiver of the privilege.
Division 4 of Part 4 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to remove the right of persons to decide not to proceed further with importing or exporting currency or monetary instruments that are required to be reported.
Division 5 of Part 4 amends the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act to, among other things, allow for the application, within the offshore area, of the provincial greenhouse gas pricing regime and to confer powers and impose duties and functions on the Canada–Newfoundland and Labrador Offshore Petroleum Board for the application of that regime. It also amends the Greenhouse Gas Pollution Pricing Act to provide that the provincial regime does not apply if the offshore area is mentioned in Part 2 of Schedule 1 to that Act. Finally, it amends the Offshore Health and Safety Act to postpone the repeal of certain regulations.
Division 6 of Part 4 amends the Canada Business Corporations Act to set out criteria for identifying individuals with significant control over a corporation. The Division also sets out a requirement for a corporation that meets certain criteria to keep a register of individuals with significant control and requirements respecting the information to be recorded in it. Finally, the Division includes applicable offences and punishments.
Subdivision A of Division 7 of Part 4 amends the Patent Act in order to
(a) provide a regulation-making authority for the establishment of requirements for written demands relating to patents;
(b) specify that an act committed for the purpose of experimentation relating to the subject matter of a patent is not an infringement of the patent and that licencing commitments that bind the owner of a standard-essential patent or the holder of a certificate of supplementary protection that sets out such a patent bind any subsequent owners or holders;
(c) expand the rights of a person in respect of a claim in a patent who meets the requirements to be considered a prior user;
(d) ensure that patent prosecution histories may be admissible into evidence for certain purposes;
(e) clarify when a late fee must be paid in respect of divisional applications as well as when the confidentiality period begins in the case where a request for priority is deemed never to have been made.
Subdivision B of Division 7 of Part 4 amends the Trade-marks Act to, among other things,
(a) add bad faith as a ground of opposition to the registration of a trade-mark and for the invalidation of a trade-mark registration;
(b) prevent the owner of a registered trade-mark from obtaining relief for acts done contrary to section 19, 20 or 22 of that Act during the first three years after the trade-mark is registered unless the trade-mark was in use in Canada during that period or special circumstances exist that excuse the absence of use;
(c) clarify that the prohibitions in subparagraph 9(1)‍(n)‍(iii) and section 11 of that Act do not apply with respect to a badge, crest, emblem or mark that was the subject of a public notice of adoption and use as an official mark if the entity that made the request for the public notice is not a public authority or no longer exists; and
(d) modernize the conduct of various proceedings before the Registrar of Trade-marks, including by providing the Registrar with additional powers in such proceedings.
It also makes certain housekeeping amendments to provisions of the Trade-marks Act that are enacted by the Economic Action Plan 2014 Act, No. 1 and the Combating Counterfeit Products Act.
Subdivision C of Division 7 of Part 4 amends the Copyright Act in order to specify that certain information is not permitted to be included within a notice under the notice and notice regime and to provide for a regulation-making power to prohibit further types of information from being included within such a notice.
Subdivision D of Division 7 of Part 4 enacts the College of Patent Agents and Trade-mark Agents Act. That Act establishes the College of Patent Agents and Trade-mark Agents, which is to be responsible for the regulation of patent agents and trade-mark agents in the public interest. That Act, among other things,
(a) requires that individuals obtain a licence in order to act as patent agents or trade-mark agents and that licensees comply with a code of professional conduct;
(b) authorizes the College’s Investigations Committee to receive complaints and conduct investigations into whether a licensee has committed professional misconduct or was incompetent;
(c) authorizes the College’s Discipline Committee to impose disciplinary measures if it decides that a licensee has committed professional misconduct or was incompetent; and
(d) creates new offences of claiming to be a patent agent or trade-mark agent and unauthorized representation before the Patent Office or the Office of the Registrar of Trade-marks.
That Subdivision also makes consequential amendments to certain Acts.
Subdivision E of Division 7 of Part 4 amends the Bankruptcy and Insolvency Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of in an insolvency proceeding or when the agreement relating to such property rights is disclaimed or resiliated in such a proceeding. It also amends the Companies’ Creditors Arrangement Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of.
Subdivision F of Division 7 of Part 4 amends the Access to Information Act and the Privacy Act to provide that the head of a government institution may refuse to disclose, under either of those Acts, information that is subject to the privilege set out in section 16.‍1 of the Patent Act or section 51.‍13 of the Trade-marks Act. It makes a related amendment to the Pest Control Products Act.
Subdivision G of Division 7 of Part 4 amends the National Research Council Act to clarify that the National Research Council of Canada has the authority to dispose of all forms of intellectual property that it develops, including future rights to such property and to provide the Council with the authority to dispose of real, personal, movable and immovable property, complementing the current provision in the Act that allows it to acquire such property.
Subdivision H of Division 7 of Part 4 amends the Copyright Act in order to modernize the legislative framework relating to the Copyright Board so as to improve the timeliness and clarity of its proceedings and decision-making processes. More specifically, it repeals spent provisions and
(a) codifies the Board’s mandate and establishes decision-making criteria;
(b) establishes new timelines in respect of Board matters, including earlier filing dates for proposed tariffs and longer effective periods for approved tariffs, and empowers the Governor in Council to make additional timelines by regulation;
(c) formalizes case management of Board proceedings;
(d) reduces the number of matters that must be considered by the Board;
(e) streamlines procedural steps across different tariff contexts, maintaining differences between them only where necessary;
(f) amends relevant enforcement provisions, including the availability of statutory damages for certain parties in respect of Board-set royalty rates and enforcement of Board-set terms and conditions; and
(g) modernizes existing language and structure for greater clarity and consistency.
Division 8 of Part 4 amends the Employment Insurance Act to, among other things, increase the maximum number of weeks for which parental benefits may be paid if these benefits are divided between claimants. It also amends the Canada Labour Code to, among other things, increase the aggregate amount of leave that may be taken by employees under sections 206.‍1 and 206.‍2 if that leave is divided between employees.
Division 9 of Part 4 enacts the Canadian Gender Budgeting Act in order to state the Government’s policy of promoting gender equality and inclusiveness by taking gender and diversity into consideration in the budget process. It also establishes related reporting requirements.
Division 10 of Part 4 amends the Bank Act to strengthen provisions that apply to a bank or an authorized foreign bank in relation to the protection of customers and the public. It implements enhancements in the areas of corporate governance, responsible business conduct, disclosure and transparency, and redress. It also amends the Financial Consumer Agency of Canada Act to strengthen the mandate of the Financial Consumer Agency of Canada and grant additional powers to that Agency.
Division 11 of Part 4 amends the First Nations Land Management Act to give effect to amendments to the Framework Agreement on First Nation Land Management respecting, among other things, procedures for obtaining community approval of a land code, the lands to which a land code may apply, the addition of lands to First Nation land by order of the Minister and the transfer of capital moneys.
Division 12 of Part 4 amends the First Nations Fiscal Management Act to, among other things,
(a) enable more Aboriginal organizations and First Nations to benefit from the provisions of the Act in order to strengthen their financial management systems and give them access to long-term financing;
(b) address certain administrative issues identified by the bodies established under the Act; and
(c) provide another option for First Nations to access moneys held by Her Majesty for their use and benefit.
Division 13 of Part 4 amends the Export and Import Permits Act to give the Minister of Foreign Affairs the authority to issue an import allocation for goods that are included on the Import Control List under subsection 5(6) of that Act.
Division 14 of Part 4 enacts the Pay Equity Act to establish a proactive process for the achievement of pay equity by the redressing of the systemic gender-based discrimination experienced by employees who occupy positions in predominantly female job classes. The new Act requires federal public and private sector employers that have 10 or more employees to establish and maintain a pay equity plan within set time frames so as to identify and correct differences in compensation between predominantly female and predominantly male job classes for which the work performed is of equal value. The new Act provides for the powers, duties and functions of a Pay Equity Commissioner, which include facilitating the resolution of disputes, conducting compliance audits and investigating disputes, objections and complaints, as well as making orders and imposing administrative monetary penalties for violations of that Act. The new Act also requires the Pay Equity Commissioner to report annually to Parliament on the administration and enforcement of the new Act.
Division 14 also amends the Parliamentary Employment and Staff Relations Act to provide for the application of the Pay Equity Act to parliamentary employers with certain adaptations and without limiting the powers, privileges and immunities of the Senate, the House of Commons and the members of those Houses.
It also makes the Minister of Labour responsible for the administration of the Federal Contractors Program for Pay Equity.
Finally, it makes related and consequential amendments to certain Acts and repeals the section of the Budget Implementation Act, 2009 that enacts the Public Sector Equitable Compensation Act.
Subdivision A of Division 15 of Part 4 amends the Canada Labour Code to, among other things,
(a) provide five days of paid leave for victims of family violence, a personal leave of five days with three paid days, an unpaid leave for court or jury duty and a fourth week of annual vacation with pay for employees who have completed at least 10 consecutive years of employment;
(b) eliminate minimum length of service requirements for leaves and general holiday pay and reduce the length of service requirement for three weeks of vacation with pay;
(c) prohibit differences in rate of wages based on the employment status of employees;
(d) address continuity of employment issues when a work, undertaking or business becomes federally regulated or in cases of contract retendering; and
(e) update group and individual termination provisions by increasing the minimum notice of termination.
Subdivision B of Division 15 of Part 4 amends the Canada Labour Code to allow the Minister of Labour to designate a Head of Compliance and Enforcement who will exercise most of the powers and perform most of the duties and functions that are related to the administration and enforcement of Parts II, III and IV of the Code.
Division 16 of Part 4 amends the Wage Earner Protection Program Act to, among other things, increase the maximum amount that may be paid to an individual under the Act, expand the definition of eligible wages, expand the conditions under which a payment may be made under the Act and create additional requirements related to Her Majesty in right of Canada’s right of subrogation in respect of payments made under the Act.
Division 17 of Part 4 amends the Bretton Woods and Related Agreements Act, the European Bank for Reconstruction and Development Agreement Act and the Official Development Assistance Accountability Act to harmonize the periods within which the reports under those Acts must be laid before Parliament in order to better communicate Canada’s international development efforts. It also repeals the definition of “official development assistance” in the Official Development Assistance Accountability Act and confers the power to define this expression by regulation.
Division 17 also enacts the International Financial Assistance Act, which provides the Minister of Foreign Affairs and the Minister for International Development with powers, duties and functions to support the delivery of a sovereign loans program, an international assistance innovation program and a federal international assistance program that promotes the mitigation of or adaptation to climate change through repayable contributions.
Division 18 of Part 4 enacts the Department for Women and Gender Equality Act which, among other things, establishes the Department for Women and Gender Equality to assist the Minister responsible for that department in exercising or performing the Minister’s powers, duties and functions that extend to and include all matters relating to women and gender equality, including the advancement of equality in respect of sex, sexual orientation, or gender identity or expression and the promotion of a greater understanding of the intersection of sex and gender with other identity factors. It also contains transitional provisions. Finally, Division 18 makes consequential amendments to other Acts.
Division 19 of Part 4 enacts the Addition of Lands to Reserves and Reserve Creation Act which authorizes a Minister, designated by the Governor in Council, to set apart lands as reserves for the use and benefit of First Nations. The Division also repeals Part 2 of the Manitoba Claim Settlements Implementation Act and the Claim Settlements (Alberta and Saskatchewan) Implementation Act.
Division 20 of Part 4 amends section 715.‍42 of the Criminal Code to require the publication of any decision not to publish a remediation agreement or order related to that agreement and of any decision related to the review of such a decision, to specify that the court may make the first decision subject to a condition, including one related to the duration of non-publication, and to allow anyone to request a review of that decision.
Division 21 of Part 4 enacts the Poverty Reduction Act, which sets out two targets for poverty reduction in Canada.
Division 22 of Part 4 amends the Canada Shipping Act, 2001 to, among other things,
(a) authorize the Governor in Council to make regulations respecting the protection of the marine environment from the impacts of navigation and shipping activities;
(b) authorize the Minister of Transport to
(i) make an interim order to mitigate risks to marine safety or to the marine environment, and
(ii) exempt any person or vessel from the application of any provision of that Act or the regulations if doing so would allow the undertaking of research and development that may enhance marine safety or environmental protection;
(c) increase the maximum amount of an administrative penalty that the Governor in Council may fix by regulation;
(d) authorize the Minister of Fisheries and Oceans, pollution response officers and accompanying persons to enter private property in the case of a discharge of oil from a vessel or oil handling facility; and
(e) double the administration monetary penalties for certain violations.
Division 23 of Part 4 amends the Marine Liability Act to modernize the Ship-source Oil Pollution Fund, including, among other things,
(a) removing the Fund’s per-occurrence limit of liability;
(b) in the event that the Fund is depleted, authorizing the temporary transfer to the Fund of funds from the Consolidated Revenue Fund;
(c) modernizing the Fund’s levy so that the Fund is replenished by receivers and exporters of oil;
(d) ensuring that the Fund’s liability for claims for economic losses caused by oil pollution aligns with international conventions;
(e) providing that the Fund is liable for the costs and expenses incurred by the Minister of Fisheries and Oceans or any other person in respect of preventive measures when the occurrence for which those costs and expenses were incurred has not yet created a grave and imminent threat of causing oil pollution damage;
(f) authorizing the provision of up-front emergency funding out of the Fund to the Minister of Fisheries and Oceans for significant oil pollution incidents;
(g) creating an expedited, simplified process for small claims to the Fund; and
(h) providing for administrative monetary penalties for contraventions of specified or designated provisions under that Act.

Sitting Resumed

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Mr. Speaker, I am pleased to rise to speak to Bill C-419, an act to amend the Bank Act, the Trust and Loan Companies Act, the Insurance Companies Act and the Cooperative Credit Associations Act. My colleagues may not know this, but I have studied the issue of credit cards extensively. Today's subject definitely interests me.

I would like to point out that many of the measures included in the bill before us today already appear in the budget implementation act. However, since this is very serious subject, a lot of consultation with the provinces and territories is needed.

As I said, certain specific measures are already included as part of the consumer protection measures in the Bank Act, as they were introduced as part of the package of measures included in Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, which received royal assent on December 13, 2018.

For example, Bill C-419 proposes that a bank must obtain the consumer's consent before increasing the credit limit on a credit card and provide written confirmation if consent is given verbally. That is important. They must not increase the limit on a credit card without the consent of the consumer. The written consent is important, and we have already added this requirement to existing protections.

The bill also proposes to require the disclosure of specific information in credit card advertising, including annual interest rates. This requirement is a duplication of existing requirements, including the obligation to disclose the annual interest rate and other interest expenses in advertising.

I will go back to what my colleague said at the outset. This text amends the Bank Act, the Trust and Loan Companies Act, and all other legislation I mentioned earlier. When Canadians deal with their financial institutions, they want their information to be protected, the goods and services to meet the highest standards and the fees they pay to be fair. First and foremost, people must know what they are getting themselves into with their credit card.

For more than a decade, the previous Conservative government failed to make any significant changes to Canada's consumer protection standards despite the major technological changes that would have made them possible.

In the wake of an extensive review of bank sales practices and broad consultations with the provinces and territories, our government took significant measures to promote Canadians' rights and interests. That is important. We always talk about the middle class. Credit cards are a method of payment and it is important that they be subject to the same rules and that people know how to use them.

Our government's decision to implement a new set of rules to protect Canadians when they use their financial institution represents the most significant change since the creation of the Financial Consumer Agency of Canada in 2001.

Conservative MPs refused to defend Canadian consumers when they formed the government. They have no real plan to defend them now.

The bill that our colleague introduced proposes two sets of amendments to federal legislation regarding financial institutions and credit cards. The first would limit credit card interest rates for consumers by reducing the amount of interest to be paid when a borrower pays 95% of his or her outstanding balance; by applying the lowest interest rate on purchases when interest rates change during a billing cycle; and by requiring lenders to apply all payments to the portion of the balance with the highest interest rate. This is an important part of the proposal. The Banking Act already requires banks to apply payments either to the balance with the highest interest rate or to prorate it to each unpaid balance.

The second set of amendments imposes new disclosure and business practice requirements. The bill would require that lenders disclose the total of all amounts of interest paid by a borrower for the previous 12 billing cycles and that credit card advertisements clearly indicate the interest rate, fees and any applicable discounts. Other amendments would require that cardholders give their consent before their credit limit can be increased. I spoke about that earlier. It is a very important measure. There are also amendments that would require that cardholders have an electronic means to decrease the credit limit on their card if a bank provides online banking.

Our government is working hard to protect consumers. As part of our ongoing efforts to improve the consumer protection framework, our government recently completed an important review and update of the consumer protection framework under the Bank Act and the Financial Consumer Agency of Canada Act. It is important to remember that this had not been done since 2001 and that we have been working on this since we took office.

The measures to be added to the previous Bank Act will be based on the information in two reports prepared by the Financial Consumer Agency of Canada, the FCAC. The first report consisted of an exhaustive review of bank sales practices, and the second reviewed the best practices in financial consumer protection. Our government was also guided by an important study carried out by the Standing Committee on Finance on consumer protection and bank practices.

The Standing Committee on Finance works very hard. Ten parliamentarians meet at least twice a week and work on reports. These people come to an agreement before making recommendations. They meet with many witnesses. When the Standing Committee on Finance, or any House committee, prepares a report, 10 parliamentarians study everything in the report to ensure that the recommendations made to the minister will improve legislation. This is done by mutual agreement.

Consultations are also needed with the provinces and territories to update the consumer protection rules. Bill C-419 introduced by our colleague across the aisle has not been the subject of extensive consultations with stakeholders, including provincial and territorial governments. This is in contrast to what was done to prepare for the most recent measure we put in place. Consultations with the provinces and territories are essential. I cannot stress that enough. These are not things that are easily changed. Consultations, witnesses and experts are needed. It is important to ensure that everything complies with all the previous rules, as well as the laws already in force. Every possible impact of amending legislation as complex as the Bank Act must be considered, as it governs banking institutions.

[Brian Masse, NDP, Windsor West, ON]

That's kind of the trajectory. This is what worries me right now with Bill C-86 in terms of what we've done and also the USMCA. We have three significant balls in the air all at the same time. They're all going to land, and we're going to be dealing with it at that time.

I don't have any other questions. I'm done.

Thank you, witnesses.

[Bob Tarantino]

I don't have any response in particular to the question you pose. I just want to commend to you the submissions that IPIC did make on Bill C-86 and also the submissions that were made in 2017 on Copyright Board reform.

[Brian Masse, NDP, Windsor West, ON]

—that they have changes to it again. It was interesting to have their presentation about that, because it's not a holistic approach, in their opinion, and it's going to create some inconsistencies.

I know that it's a lot to throw at you right here if you haven't seen it. They talked about transparency, access and efficiency as some of the common things to be fixed. Some of those things do happen in Bill C-86, but it still hasn't gone through a review.

[Casey Chisick]

I've expressed in another forum certain concerns about Bill C-86 that are not necessarily the same as those that were expressed by the board. I don't think Bill C-86 is perfect by any means in terms of addressing the issues with the Copyright Board, but I do think it's a good start. That's the kind of legislation that certainly should be reviewed within a relatively short time frame—probably five years is about appropriate—to make sure that it's having its intended effect.

Perhaps I should have studied the transcript of that appearance a little more closely. Do I understand correctly that the suggestion was the act itself be scrubbed and that we start afresh?

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

It's good that we're talking copyright. I feel that I've been infringed in my right to have a repair bill passed. There was a voluntary agreement instead. Bill C-273 was amending the Competition Act and the Environmental Protection Act to provide aftermarket service for vehicles, for technicians, for information technology. It's an environmental thing, but also a competition issue and so forth. It is pretty germane to today, because even the United States was allowing this under their laws in terms of gaining this information. I could get a vehicle fixed in the United States at an after-service garage, but I couldn't get it done in Windsor. We spent several years getting that amended, but I see that it's been moved towards I guess the larger picture of things, which is the ability to alter and change devices.

I do want to move on a bit with regard to the Copyright Board. I know that some of the testimony today was kind of removed from that, but what was interesting about the Copyright Board coming here was that they asked for three significant changes that weren't part of Bill C-86. One of the things—and I'm interested to hear if there would be an opinion—was that they wanted a scrub of the actual act, which hadn't been done since 1985.

Are there any thoughts on the Copyright Board's presentation and the fact that they don't feel that Bill C-86 is going to solve all the problems they have? They had three major points. One of them was on that. Also, the protection of their ability to make interim decisions and not be overturned was another thing they mentioned. I don't know if there are any thoughts on that, but that's one of the things that I thought was interesting about their presentation in front of us.

Anybody...? If nobody has anything because you're happy with the way it's going to be, then it's going to be that way. It's fine.

[Casey Chisick, Partner, Cassels Brock & Blackwell LLP, As an Individual]

I'm happy to be here. Thank you for inviting me back.

My name is Casey Chisick. I'm a partner at Cassels Brock in Toronto. I'm certified as a specialist in copyright law and I've been practising and teaching in that area for almost 20 years. That includes many appearances before the Copyright Board and in judicial reviews of decisions of the board, including five appeals to the Supreme Court of Canada.

In my practice, I act for a wide variety of clients, including artists, copyright collectives, music publishers, universities, film and TV producers, video game developers, broadcasters, over-the-top services and many others, but the views I express here today will be mine alone.

I want to begin by thanking and congratulating the committee for its dedication to this important task. You've heard from many different stakeholders over the course of many months, and I agree with many of their views. When I was first invited to appear last month, I planned to focus on Copyright Board reform, but that train has now left the station through Bill C-86, so I'm going to comment today a bit more broadly on other aspects of the act. I will come back to the board, though, toward the end of my remarks.

On substantive matters, I'd like to touch on five specific issues.

First, it's my view that Parliament should clarify some of the many new and expanded exceptions from copyright infringement that were introduced in the 2012 amendments. Some of those have caused confusion and have led to unnecessary litigation and unintended consequences.

For example, a 2016 decision of the Copyright Board found that backup copies of music made by commercial radio stations accounted for more than 22% of the commercial value of all of the copies that radio stations make. As a result of the expansion of the backup copies exception, the Copyright Board then proceeded to discount the stations' royalty payments by an equivalent percentage of over 22%. It took that money directly out of the pockets of creators and rights holders, even though the copies were found in that case to have very significant economic value.

In my view, that can't be the kind of balance that Parliament intended when it introduced that exception in 2012.

Second, the act should be amended to ensure that statutory safe harbours for Internet intermediaries work as intended. They need to be available only to truly passive entities, not to sites or services that play more active roles in facilitating access to infringing content. I agree that intermediaries who do nothing more than offer the means of communication or storage should not be liable for copyright infringement, but too many services that are not passive, including certain cloud services and content aggregators, are resisting payment by claiming that they fall within the same exceptions. To the extent that it's a loophole in the act, it should be closed.

Third, it's important to clarify ownership of copyright in movies and television shows, mostly because the term of copyright in those works is so uncertain under the current approach, but I disagree with the suggestion that screenwriters or directors ought to be recognized as the authors. I haven't heard any persuasive explanation from their representatives as to why that should be the case or, more importantly, what they would do with the rights they're seeking if those rights were to be granted.

In my view, given the commercial realities of the industry, which has dealt with this for years under collective agreements, a better solution would be to deem the producer to be the author, or at least the first owner of copyright, and deal with the term of copyright accordingly.

Fourth, Parliament should reconsider the reversion provisions of the Copyright Act. Currently, assignments and exclusive licences terminate automatically 25 years after an author's death, with copyright then reverting to the author's estate. That was once standard in many countries, but it's now more or less unique to Canada, and it can be quite disruptive in practice.

Imagine spending millions of dollars turning a book into a movie or building a business around a logo commissioned from a graphic designer only to wake up one day and find that you no longer have the right to use that underlying material in Canada. There are better and more effective ways to protect the interests of creators, many of whom I represent, without turning legitimate businesses upside down overnight.

Fifth, the act should provide a clear and efficient path to site blocking and website de-indexing orders on a no-fault basis to Internet intermediaries and with an appropriate eye on balance among the competing interests of the various stakeholders. Although the Supreme Court has made clear that these injunctions may be available under equitable principles, the path to obtaining them is, in my view, far too long and expensive to be helpful to most rights holders. Canada should follow the lead of many of its major trading partners, including the U.K. and Australia, by adopting a more streamlined process—one that keeps a careful eye on the balance of competing interests among the various stakeholders.

In my remaining time, I'd like to address the recent initiatives to reform the operations of the Copyright Board.

The board is vital to the creative economy. Rights holders, users and the general public all rely on it to set fair and equitable rates for the uses of protected material. For the Canadian creative market to function effectively, the board needs to do its work and render its decisions in a timely, efficient and predictable way.

I was glad to see the comprehensive reforms in Bill C-86. I'm also mindful that the bill is well on its way to becoming law, so what I say here today may not have much immediate impact. For that reason, and in the interest of time, I'll just refer you to the testimony I gave before the Senate banking committee on November 21. I'll then touch on two specific issues.

First, the introduction of mandatory rate-setting criteria, including both the public interest and what a willing buyer would pay to a willing seller, is a very positive development. Clear and explicit criteria should result in a more timely, efficient and predictable tariff process. That's important because unpredictable rates can lead to severe market disruption, especially in emerging markets, like online music.

I'm concerned that the benefits of the provision in Bill C-86 will be undermined by its language, which also empowers the board to consider “any other criterion” it deems appropriate. An open-ended approach like this will create more mandatory boxes for the parties to check, in addition to things like technological neutrality and balance, which the Supreme Court introduced in 2015, but it won't guarantee that the board won't simply discard the parties' evidence in favour of other, totally unpredictable factors. That could increase the cost of board proceedings, with no corresponding increase in efficiency or predictability.

If it's too late to delete that provision from Bill C-86, I suggest that the government move quickly to provide regulatory guidance as to how the criteria should be applied, including what to look for in the willing buyer, willing seller analysis.

Last, very briefly, I understand that some committee witnesses have suggested that rather than doing it voluntarily, as the act currently provides, collectives should be required to file their licensing agreements with the Copyright Board. I agree that having access to all relevant agreements could help the board develop a more complete portrait of the markets it regulates. That's a laudable goal.

However, there's also an important counterweight to consider: Users may be reluctant to enter into agreements with collectives if they know they're going to be filed with the Copyright Board and thus become a matter of public record. The concern would be, of course, that services in the marketplace are operating in a very competitive environment. The last thing they want to do is make the terms of their confidential agreements known to everyone, including their competitors. I can say more about this in the question and answer session to follow.

Thank you for your attention. I do look forward to your questions.

[Mark Schaan]

We can both take that.

Yes, the legislative effort related to Bill C-86 was conceived and worked on by the Department of Canadian Heritage, the Department of Innovation, Science and Economic Development Canada, and the Copyright Board.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

My question is for Mr. Simard. Did you consult the Copyright Board, and did they make these suggestions to your department for Bill C-86?

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Madame Théberge, do you think we missed an opportunity? Your second recommendation was to clarify the binding nature of the board tariffs. Do you think that in Bill C-86 we missed the opportunity, and that maybe this committee could, in part of its recommendations, encourage government to further clarify the binding nature of board tariffs and licences?

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

Thank you to the witnesses.

Madame Théberge, you noted in your written testimony here that you're recommending we change the act to grant the board the power to issue interim decisions. To your knowledge, why wasn't this included in Bill C-86?

[Nathalie Théberge]

I'll start with a few preliminary comments, and then I'll turn to the secretary general, who is one of the key persons involved in managing the process before the board. A lot of numbers fly around the board and a lot of myths as well.

The seven years assumes no stop between the beginning and the end of the process, but in reality a process can be stop-and-go. There are moments during the process when parties come to the board and say to hold off, because they're negotiating. That adds time to the clock.

That being said, we're fully conscious that there's pressure for the board to render decisions more quickly, hence the proposals that were presented by the government in Bill C-86, which would put in regulation a specific time frame for one piece of the process, which is the piece of the process that the board controls, the rendering of decision.

Gilles, I don't know if you want to add something.

[Mark Schaan]

Thank you, Mr. Cappuccino.

Allow me to also mention that, as committed in the government's intellectual property strategy, Bill C-86 proposes a change to the notice and notice provisions of the Copyright Act to protect consumers while ensuring that the notice and notice regime remains effective in discouraging infringement.

The proposed amendments would clarify that notices that include settlement offers or payment demands do not comply with the regime. This was an important shift, given the consensus of all parties in the copyright system, and the continued fear of consumer harm in the face of the continued use of settlement demands.

In closing, we would like to applaud the committee for the thorough review of the Copyright Act that you've conducted so far. We've particularly noted members' efforts to raise issues related to indigenous traditional knowledge throughout the exercise. Such probing and open consultations are invaluable to the development of strong public policy.

We would be pleased to answer your questions.

Thank you.

[Kahlil Cappuccino]

Thanks very much, Mark.

Mr. Chair and distinguished members of the committee, as the ministers of ISED and PCH committed to in their first letter to your committee in December 2017, and pursuant to public consultations and previous studies by committees of both the House of Commons and the Senate, the government has taken comprehensive action to modernize the board.

First, budget 2018 increased by 30% the annual financial resources of the board. Second, the government appointed a new vice-chair and CEO of the board, Madame Nathalie Théberge, who is sitting with us, as well as appointing three additional members of the board. With these new appointments and additional funding, the Copyright Board is on its way and ready for modernization. Third, Bill C-86, which is now before the Senate, proposes legislative changes to the Copyright Act to modernize the framework in which the board operates.

As numerous witnesses stated to you as part of your review, more efficient and timely decision-making processes at the Copyright Board are a priority. The proposed amendments in the bill seek to revitalize the board and empower it to play its instrumental role in today's modern economy.

It would do this by introducing more predictability and clarity in board processes, codifying the board's mandate, setting clear criteria for decision-making and empowering case management. To tackle the delays directly, the proposed amendments would require tariff proposals to be filed earlier and be effective longer, and a proposed new regulatory power would enable the Governor-in-Council to establish decision-making deadlines. Finally, the proposed amendments would allow direct negotiation between more collectives and users, ensuring that the board is only adjudicating matters when needed, thus freeing resources for more complex and contested proceedings.

These reforms would eliminate barriers for businesses and services wishing to innovate or enter the Canadian market. They would also better position Canadian creators and cultural entrepreneurs to succeed so they can continue producing high-quality Canadian content. Overall, these measures would ensure that the board has the tools it needs to facilitate collective management and support a creative marketplace that is both fair and functional.

However, the changes do not address broad concerns that have been raised around the applicability and enforceability of board-set rates. Certain stakeholders asked that the government clarify when users have to pay rates set by the board and provide stronger tools for enforcement when those rates are not paid. The ministers felt that these important issues were more appropriately considered as part of the review of the Copyright Act, with the benefit of the in-depth analysis being undertaken by this committee and the Standing Committee on Canadian Heritage.

We look forward to recommendations that will help foster sustainability across all creative sectors, including the educational publishing industry.

At this point, I'd like to hand things back over to Mark to conclude.

[Nathalie Théberge, Vice-Chair and Chief Executive Officer, Copyright Board]

Mr. Chair and distinguished members of this committee, thank you.

My name is Nathalie Théberge. I am the new vice-chair and CEO of the Copyright Board, as of October. I will be speaking today as CEO.

As you said, Gilles McDougall, secretary general, and Sylvain Audet, general counsel, both from the board, are with me today. I would like to thank the committee for giving us the opportunity to speak on the parliamentary review of the Copyright Act.

First, I'd like to provide a reminder: The Copyright Board of Canada is an independent, quasi-judicial tribunal created under the Copyright Act. The board's role is to establish the royalties to be paid for the use of works and other subject matters protected by copyright, when the administration of these rights is entrusted to a collective society. The direct value of royalties set by the board's decisions is estimated to almost $500 million annually.

The board sits at the higher end of the independent spectrum for administrative tribunals. Its mandate is to set fair and equitable tariffs in an unbiased, impartial and unimpeded fashion. This is not an easy task, especially as information required to support the work of the board is not easily acquired. The board is on the onset of a major reform following the introduction of changes to the Copyright Act imbedded in the Budget Implementation Act, Bill C-86.

If I may, I would like to state how committed the board is towards implementing the reform proposals. Of course, the impact of these proposals will take some time to assess as there will be a transition period during which all players involved, including the board and the parties that appear before it, will need to adapt and change their practices, behaviours and, to some extent, their organizational culture.

This transition period is to be expected due to the ambitious scope of the reform proposals, but we believe that the entire Canadian intellectual property ecosystem will benefit from a more efficient pricing system under the guidance of the Copyright Board.

However, reforming the board is not a panacea for all woes affecting the ability for creators to get fairly compensated for their work and for users to have access to these works. As such, the board welcomes the opportunity to put forward a few pistes de réflexion to the committee, hoping its experience in the actual operationalization of many provisions of the Copyright Act may be useful.

Today, we would like to suggest three themes the committee may want to consider. We were very careful as to choose only issues of direct implication for the board's mandate and operations, as defined in the Copyright Act and amended through the Budget Implementation Act 2018, No. 2, currently under review by Parliament.

The first theme relates to transparency. Committee members who are familiar with the board know that our ability to render decisions that are fair and equitable and that reflect the public interest depends on our ability to understand and consider the broader marketplace. For that, you need information, including on whether other agreements covering similar uses of copyrighted material exist in a given market. This is a little bit like real estate, where to properly establish the selling price of a property you need to consider comparables, namely, the value of similar properties in the same neighbourhood, the rate of the market, etc.

Currently, filing of agreements with the board is not mandatory, which often leaves the board having to rely on an incomplete portrait of the market. We believe that the Copyright Act should provide a meaningful incentive for parties to file agreements between collectives and users. Some may argue that the board already has the authority to request from parties that they provide the board with relevant agreements. We think that legislative guidance would avoid the board having to exert pressure via subpoena to gain access to those agreements, which in turn can contribute to delays that we all want to avoid.

More broadly, we encourage the committee to consider in its report how to increase the overall transparency within the copyright ecosystem in Canada. As part of the reform, we will do our part at the board by adding to our own processes steps and practices that incentivize better sharing of information among parties and facilitate the participation of the public.

The second theme relates to access. We encourage the committee to include in its report a recommendation for a complete scrub of the act, since the last time it was done was in 1985. Successive reforms and modifications have resulted in a legislative text that is not only hard to understand but that at times appears to bear some incoherencies. In a world where creators increasingly have to manage their rights themselves, it is important that our legislative tools be written in a manner that facilitates comprehension. As such, we offer as an inspiration the Australian copyright act.

We further encourage the committee to consider modifying the publication requirements in the orphan works regime. Currently, where the owner of copyright cannot be located, the board cannot issue licences in relation to certain works, such as works that are solely available online or deposited in a museum. We believe the act should be amended to permit the board to issue a licence in those cases, with safeguards.

Finally, our third theme relates to efficiency. The board reform as proposed in Bill C-86 would go a long way in making the tariff-setting process in Canada more efficient and predictable and ultimately a better use of public resources. I believe the committee has heard the same message from various experts.

We recommend two other possible means to achieve these objectives.

First, we encourage the committee to consider changing the act to grant the board the power to issue interim decisions on its motion. Currently, the board can only do so on application from a party. This power would provide the board with an additional tool to influence the pace and dynamics of tariff-setting proceedings.

Second, we encourage the committee to explore whether the act should be modified to clarify the binding nature of board tariffs and licences. This proposal follows a relatively recent decision of the Supreme Court of Canada where the court made a statement to the effect that when the board sets royalties within licences in individual cases—the arbitration regime—such licences did not have a mandatory binding effect against users in certain circumstances. Some commentators have also expressed different views on how that statement would be applicable to the tariff context before the board.

We are aware that this is a controversial issue, but would still invite you to study it if only because parties and the board spend time, efforts and resources in seeking a decision from the board.

On that happy note, we congratulate each member of the committee for the work accomplished thus far, and thank you for your attention.