Finance Committee on May 28th, 2013

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is meeting 125 of the Standing Committee on Finance. Orders of the day, pursuant to the order of reference of Tuesday, May 7, 2013, are to study Bill C-60, an act to implement certain provisions of the budget tabled in Parliament on March 21, 2013, and other measures.

Colleagues, I want to welcome you all here, as well as the officials from the Department of Finance especially, and other departments who are here with us this morning. They are here to address any issues that members may have as we go through clause-by-clause consideration. I want to welcome the officials to the table and those in the room here.

Colleagues, I do have a series of amendments and I will be proceeding clause by clause. You should be following the agenda that I will be proceeding with for all of you here today. Everybody should have a copy of that agenda.

Pursuant to Standing Order 75(1) consideration of clause 1, the short title, is postponed.

Therefore I shall start with clause 2.

Colleagues, I do not have an amendment until clause 7, in which case I have amendment LIB-1.

(Clause 2 agreed to on division)

(Clauses 3 and 4 agreed to)

(Clauses 5 and 6 agreed to on division)

(On clause 7)

[The Chair, Conservative, James Rajotte]

We have amendment LIB-1, in the name of Mr. Brison.

You should all have your amendments package.

I will go to Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

On May 9, my colleague Ted Hsu asked the officials a few questions that, at the time, they were unable to answer. No information has been provided back to the committee since then, so I'd like to try again.

First, which missions in the last decade have had, at any time, a risk score between 1.5 and 2?

Secondly, have any of the prescribed missions under the income tax regulations had, at any time, a risk score lower than 2—not to be confused with a risk level of 2. This is the category of missions with a risk score between 1.5 and 2.49.

[The Chair, Conservative, James Rajotte]

Mr. Keenan, would you like to comment?

[Sean Keenan, Senior Program Analyst, Federal-Provincial Relations Division and Social Policy Branch, Department of Finance]

My understanding is that the question has been put to the Department of National Defence and a response is being prepared. I don't have that response with me today.

[Scott Brison, Liberal, Kings—Hants, NS]

I appreciate Mr. Keenan's earnest response, but he would understand that it's difficult for us as parliamentarians to deal with the legislation today when we're still waiting for information.

I propose Liberal-1 amendment, the rationale being that today the government has the discretion to provide tax-free status to missions with a risk score between 1.5 and 2. Bill C-60 gets rid of that discretion. It effectively handcuffs the government and prevents it from extending tax-free status to certain missions. And the government has yet to provide the rationale for this. My amendment would simply restore that discretion.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

I have Ms. Glover on this issue.

Ms. Glover.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I want to support Mr. Brison's comments with regard to our surprise that we haven't received an answer to Mr. Hsu's question. I'd like to suggest that we move this clause and the vote on this clause to later in the day, and that we ask DND to come to committee and provide us with the answers to the questions aptly put by the Liberal member some time ago, so that we can actually make an educated decision on this. I understand very well why, but I think in fairness we should provide an answer to the Liberals, who asked the questions some time ago.

[The Chair, Conservative, James Rajotte]

The suggestion is to table the vote on amendment Liberal-1 and clause 7.

(Clause 7 allowed to stand)

Great. Thank you. I assume those officials in the room who are responsible will endeavour to get that answer as soon as possible.

(Clauses 8 and 9 agreed to)

(On clause 10)

I have an amendment by Monsieur Plamondon. As you know, colleagues, we need the consent of the committee to allow a member who is not a full member of the committee to speak at committee stage. I believe I have the consent to allow Monsieur Plamondon to speak.

Mr. Plamondon, you have two minutes.

Sorry. On this point we have Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Chair, I want to say on the record that we believe the process that's been adopted by the finance committee to deal with the amendments of Bill C-60 submitted by non-members does not conform with parliamentary procedure. Only the House of Commons can appoint committee members, and non-members cannot move motions. I just want to be on the record with that.

[The Chair, Conservative, James Rajotte]

I appreciate that.

Ms. Glover.

[Shelly Glover, Conservative, Saint Boniface, MB]

On the government's behalf, I want to welcome the independent members and thank them for providing their input to this very important process. I want them to know that they're very welcome and that we're happy to hear from them.

[The Chair, Conservative, James Rajotte]

Thank you.

I do appreciate the committee's indulgence on this matter. We will have discussion of clause 10 on this point first.

Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

I also like Ms. Glover's comments that we welcome the input of the independent members at this stage of our deliberations at committee.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Plamondon, you have two minutes.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Thank you, Mr. Chair.

I would also like to thank the members of the committee for agreeing to let us make this amendment and for the brief opportunity to comment on it.

The amendment I propose to clause 10 is very simple. As the bill presently stands, this measure would end in 2018. With this amendment, we would like to remove the words “and ends before 2018”.

This tax credit for first-time donors is a very good initiative and we think that it should become permanent. It must be said that it generally takes three or four years for people to become used to this kind of measure. But just when many more people are becoming aware of the measure and able to take advantage of it, it will come to an end. That is why I feel that the measure should be permanent, Mr. Chair, and the words “and ends before 2018” should be removed.

Thank you for your attention.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Plamondon.

I have Ms. McLeod on this issue, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

Although I appreciate Mr. Plamondon's sentiments about how it is an important measure and how he supports the charitable sector, I think we have to look at the extensive work the finance committee did in this area. We know there are a number of possible ways to move forward in supporting the charitable sector.

This was deemed to be an opportunity to try one particular measure. I think it is very important that there is a time limit on the super donor tax credit, the success of which we will measure moving forward, because that will compel us to review the important measure.

[The Chair, Conservative, James Rajotte]

Thank you.

Is there any further discussion?

(Amendment negatived [See Minutes of Proceedings])

(Clause 10 agreed to)

(Clause 11 agreed to on division)

(On clause 12)

[The Chair, Conservative, James Rajotte]

Go ahead, Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Chair, during the committee hearings we heard significant testimony on this area from the credit unions. They are extremely concerned about the impact this tax hike is going to have on credit unions. It will hinder their ability to compete with the big banks.

The largest of the credit unions in Canada is one-sixteenth of the size of the smallest of the big banks, and the credit union sector is a key sector in Canada's financial community. It represents 5.2 million Canadians outside of Quebec who belong to credit unions, many of whom are in communities where a credit union is in fact the only financial institution. Canadians have long appreciated the structure provided by credit unions as an alternative to the major banks. They appreciate the community service that credit unions offer. Credit unions get engaged in local initiatives. They're very generous in terms of their donations and sponsorship of various community activities. The fact that credit unions were not consulted about this change has created significant uncertainty for many credit unions and for the Canadians who rely on the services of credit unions.

I know in my own riding I have had meetings with the credit unions. They have expressed grave concern about the impact of this change. It's a shock to the credit unions, which don't have the ability to go out and just raise money on the markets, as the banks do. They get their money from their members and they invest that money and try to see it grow over time. They perform a very different role for Canadians in the financial sector.

I want to strenuously oppose clause 12 in part 1 and urge the government to reconsider.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash.

For further discussion, I have Mr. Brison and then Mr. Adler.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, I represent a rural and small-town riding. I find the credit unions provide tremendous service to rural and small-town Canada. In many cases over the last 15 years or so, banks have closed a lot of the branches in smaller communities, not for any malice, but just based on the fact that their business model does not necessarily fit into some of these smaller communities.

During the same period of time, I've seen credit unions expanding their presence in these communities, which means they are part of the community—to lend to small businesses that are the backbone of rural and small-town Canada. They are there to provide services to seniors. Increasingly, in rural and small-town Canada, we've seen an aging demographic in our communities, and the importance of the credit unions and the role they play in our communities has grown in recent years.

We have heard strenuous testimony on this legislation on behalf of credit unions. The government hasn't explained the rationale for it, so I believe it ought to reconsider.

We are opposed to these changes, and later I will be proposing an amendment to clause 15.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

Mr. Adler, it's your turn, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair.

Notwithstanding what the opposition member just said, I would add that credit unions still have access to the lower small business tax rate. That has not changed. We're simply eliminating an outdated tax subsidy from the 1970s when the tax system was very different from what it is today. I would add that no other small business receives this special tax subsidy. Quebec eliminated a comparable subsidy in 2003, also recognizing that it was no longer fair under the current system.

As everybody knows, our government continues to be a strong supporter of credit unions. We're creating a federal option for credit unions to help them grow.

Thank you, Chair.