Evidence of meeting #32 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was accounts.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Brian Ernewein  General Director, Tax Policy Branch, Department of Finance
Maia Welbourne  Senior Director, Policy Integration and Innovation, Department of Citizenship and Immigration
Kevin Shoom  Senior Chief, International Taxation and Special Projects, Department of Finance
Bernard Butler  Director General, Policy Division, Policy, Communications and Commemoration Branch, Department of Veterans Affairs
Alexis Conrad  Director General, Temporary Foreign Worker Directorate, Department of Employment and Social Development
Jeremy Rudin  Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
France Pégeot  Special Advisor to the Deputy Minister, Department of Justice

3:30 p.m.

Conservative

The Chair Conservative James Rajotte

I call to order this meeting number 32 of the Standing Committee on Finance. Pursuant to the order of reference of Tuesday, April 8, 2014, we are studying Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.

We have two panels here this afternoon. We are very pleased to have the Hon. Joe Oliver, Minister of Finance, in his first appearance at this committee.

Welcome, Minister, to the finance committee. We are very pleased to have you.

We are also pleased to have two officials from the Department of Finance who are well known to all of us, Mr. Brian Ernewein, the general director of the tax legislation division of the tax policy branch, and the ADM for the financial sector policy branch, Mr. Jeremy Rudin.

Welcome back to the committee, gentlemen.

Minister, welcome to the committee. You have an opening statement and then we will have questions from all members of the committee.

May 6th, 2014 / 3:30 p.m.

Eglinton—Lawrence Ontario

Conservative

Joe Oliver ConservativeMinister of Finance

Thank you very much for the opportunity to appear before the committee for the first time in my new role, to discuss economic action plan 2014.

I would like to provide a brief overview of the objectives of Bill C-31 and highlight some of its key initiatives.

This is our government's 10th budget since 2006. Over that period, our country has been confronted by unprecedented economic challenges from beyond our borders. With the help of our economic action plan, Canada's economy has seen the best economic performance among all G-7 countries in recent years, both during the global recession and throughout the recovery.

Nearly a million net new jobs have been created since July 2009; we have the best job creation record in the G7. Over 85% of those new jobs are full time, and over 80% are in the private sector. Some two-thirds are in high-wage industries.

However, in light of ongoing global economic uncertainty, Canada cannot rest on its laurels. That is why economic action plan 2014 focuses on creating jobs and the right conditions for long-term economic prosperity while remaining committed to returning to a balanced budget in 2015.

To that end, this government understands, as do most Canadians, that balancing a budget takes a sound fiscal plan and discipline. The budget will not balance itself. Balancing the budget keeps taxes low and ensures that government services are sustainable over the long-run. It also gives us the flexibility to deal with the unexpected, like the recent economic shocks we've had to overcome.

Our government has not wavered from our objective, and it has cut the deficit by nearly two thirds since the economic downturn. Our goal is now within sight. Including the measures announced in economic action plan 2014, we expect to realize a surplus of $6.4 billion in 2015-16, including a $3-billion amount, an annual adjustment for risk. Unlike previous governments, we are not returning to balance by raising taxes on Canadians or cutting transfers to persons or to other levels of government. In fact, major federal transfers to provinces and territories for health care and social services will reach a record high of almost $65 billion in 2014-15, an increase of over 50% since 2006. Instead, we have focused on controlling the size and cost of government. Overall, since 2010, our actions are saving taxpayers roughly $19 billion every year. That is economic leadership and a testament to my predecessor the late Jim Flaherty.

Canada has the lowest overall tax rate on new business investment in the G-7.

However, to achieve Canada's full economic potential, we have to ensure that Canadians have the skills they need to succeed in today's economy and be first in line for available jobs.

To increase responsiveness of training to labour market needs, the Canada job grant will be implemented this year, placing skills training decisions in the hands of employers. This will be the cornerstone of new labour market agreements with the provinces and territories.

Bill C-31 takes further steps to ensure that federal programs are directed towards meeting labour market requirements. They include strengthening the labour market opinion process to deter employers from breaking the rules with a system of administrative monetary penalties for employers of foreign workers, and supporting the successful implementation of an expression of interest economic immigration system.

The government has increased Canada's openness to trade and investment, promoted business competitiveness, and strengthened the financial sector. Today's legislation builds on this foundation by cutting red tape for more than 50,000 employers, by reducing the maximum number of required payments on account at source deductions, and reducing barriers in the international and domestic flow of goods and services.

Natural resource economic development projects are a major source of job creation in all regions of Canada. Our natural resources sector represents 18% of our economy, supports 1.8 million jobs directly and indirectly, and generates some $30 billion per year in government revenues.

Bill C-31 is in line with our government's responsible resource development plan because it supports mining exploration by small companies by extending the 15% tax credit for flow-through share investors for one year and eliminating tariffs on mobile offshore drilling units.

Mr. Chairman, I would like to turn to the financial sector. It plays a fundamental role in transforming savings into productive investments in the economy. Bill C-31 proposes new initiatives that will build on Canada's financial sector advantage.

First, our government is at the forefront of the global fight against money laundering and terrorist financing, and implementing measures that safeguard the integrity of Canada's financial system and the safety and security of Canadians. That is why Bill C-31 will enhance the ability of the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, to disclose to federal partners threats to the security of Canada.

Mr. Chairman, while Canada's financial system has been rated one of the soundest in the world, it has the only capital markets regulatory system in the world that does not have a single national securities regulator. Critics of the current system believe that it is overly complex, inefficient, and a barrier to foreign investment in Canada, and they are right.

That is why, last September, our government and the governments of British Columbia and Ontario, agreed to establish a cooperative capital markets regulatory system. The cooperative system will better protect investors to enhance enforcement, support more efficient capital markets, and more effectively manage systemic risk. Our government invites all provinces and territories to participate in the implementation of the cooperative system.

Bill C-31 includes a measure to make payments to participating jurisdictions that will lose net revenues as a result of the transition to the cooperative system.

Finally, Mr. Chairman, our legislation builds on previous actions by our government to support families and communities, and improve the quality of life for hard-working Canadians. Specifically, Bill C-31 proposes to increase the maximum amount of the adoption expense tax credit to $15,000 to help make adoption more affordable for Canadian families.

The bill would also introduce a search and rescue volunteers tax credit, for search and rescue volunteers who perform at least 200 hours of service in a year.

It proposes to exempt acupuncturists and naturopath doctors' professional services from the GST/HST.

It would also expand the current GST/HST exemption for training that is especially designed to help individuals cope with a disorder or disability.

And finally, it would enhance access to employment insurance sickness benefits for claimants who receive parents of critically ill children and compassionate care benefits.

In summary, the economic action plan is working. It's creating jobs, keeping the economy growing, and returning to balanced budgets. By staying the course, and sticking to our proven economic action plan, Canada remains on track for a more prosperous future.

Now I invite questions from the committee. Government officials have also joined us today to answer any questions you may have about this bill. Thank you very much.

3:40 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much, Minister, for your opening statement.

We will begin members' questions with Mr. Cullen, please, for seven minutes.

3:40 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Thank you very much, Mr. Chair.

Thank you, Minister, for your presentation, and congratulations on your assignment to Finance. We also hold your predecessor in incredibly high regard and we know you have a difficult act to follow.

I'll step right into things. With regard to the temporary foreign worker program that you made reference to in your speech, there is an enactment in this bill to allow the minister to mete out penalties to companies that abuse the program. Could you describe what the upper limit of those penalties might be?

3:40 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

Mr. Chairman, in respect to the immigrant investment program, our position is clear. Canadian permanent residency and citizenship are not for sale. There was a disastrous mess left by the previous government, and immigrants were waiting for years.

I missed the very beginning of your question. I'm sorry.

You shouldn't take off that time, Mr. Chairman.

3:40 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

I can clarify, Minister. Within the legislation there is an enactment to allow the minister to hand out penalties to employers who abuse the TFW program. Can you describe what the upper limits of those monetary penalties might be?

3:40 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

I understand the mechanism by which...I'm not certain that I know the upper limit. I can tell you that a number of factors will be considered in determining the amounts of administrative monetary penalties, including the type and the scale of non-compliance. Details, including the amounts, would be set out in amendments to the immigration and refugee protection regulations. I have to assume that the amount is not yet determined.

3:40 p.m.

Conservative

The Chair Conservative James Rajotte

Mr. Cullen, you have another.... Do you want to ask Mr. Conrad to respond?

3:40 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

No. I think Mr. Conrad nodded to the minister's answer that the limit has not yet been set.

Minister, can you tell us how many companies in Canada are now on the so-called blacklist of employers who have abused the TFW program?

3:40 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

I don't have the answer, but we can get back to you.

3:40 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Okay.

When was your department first made aware that there were abuses taking place under the temporary foreign worker program?

3:40 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

Well, this is a program, as you know, that relates to another ministry, so I don't have that information.

3:40 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

I understand that, but there are modifications to that program that have been instituted under this omnibus legislation. Perhaps this points to the challenge with the process that the government has chosen here.

What we're trying to understand is that we've had many cases—upwards of 200 cases were found in Alberta alone in 2012—of companies abusing or allegedly abusing the temporary foreign worker program, and we can't find anywhere near that number of companies that have been applied.... You talked in your presentation—it's referenced here in the omnibus legislation—about getting tough on employers that abuse. I'm wondering if “getting tough” means those financial penalties and also putting more employers on the black list. This has existed for two years, but we've only been able to find one or two companies on this blacklist, and those were only put on within the last 30 days.

Is that correct, what I've said, or am I misspeaking?

3:45 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

I don't have that detail because it's another ministry, but the government is committed to the reforms. That's why we have introduced administrative monetary penalties as an additional deterrent that would help to promote and enhance regulatory requirements and ensure that the program is used as intended, which is as a temporary source of labour as a last resort, when Canadians and permanent residents are not available.

3:45 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Thank you.

Would you agree with the statement that the manufacturing sector in Canada has lost somewhere near 300,000 full-time jobs since the beginning of the recession?

3:45 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

I don't have the exact number, but we do know that the manufacturing sector has lagged the economic performance of some of the other sectors in Canada, and that's why we have maintained a low-tax policy for jobs and growth.

3:45 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Thank you.

Would having doubled the temporary foreign worker program into the manufacturing sector been a wise policy then for the Government of Canada to have taken, particularly in a sector, as you say, that lagged behind and is still missing approximately 300,000 jobs that have not since been replaced?

3:45 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

The temporary worker program is designed to find foreign workers in areas of the country and sectors of the economy where the particular skills are not available. That is a fact—

3:45 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

I know the design, but you're talking about Windsor, London, and Hamilton. Is it your government's suggestion that skilled workers could not be found in those areas to fill those jobs, because in all of those examples, hundreds and thousands of temporary foreign workers were brought in to fill vacant manufacturing jobs.

3:45 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

What I'm saying is that there are some companies and some regions and some sectors where there has been a shortage of people able to fulfill the specific jobs that the companies are looking to fill.

While the overall numbers do not suggest a job shortage, in individual sectors.... And I know about the natural resource sector, because I've travelled the world and throughout the country, and this has been identified as a huge issue. This is of course a big sector. It's 18% of the Canadian economy, and there are hundreds of thousands of highly skilled jobs that are not being filled, and the numbers are going to get even larger.

3:45 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Allow me one last question.

I'm sure you'd agree that small and medium business in Canada is a vital part of our economy. Was there a reason the government chose to exclude the small business hiring tax credit from this budget legislation? Was it an ineffective program? Was it something the government was dissatisfied with?

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Okay.

Minister, just a brief response, please.

3:45 p.m.

Conservative

Joe Oliver Conservative Eglinton—Lawrence, ON

Perhaps I could ask my.... Do you have an answer to that?

I'm not aware of.... We're talking here about the budget implementation act, and you're asking me about something that is not in the act. We have a variety of measures to promote small business, including a lower small business tax of 11%, which has created hundreds of thousands of jobs in this country.

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Okay, thank you.

Thank you, Mr. Cullen.

We'll move on to Mr. Keddy for seven minutes, please.

3:45 p.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Thank you, Mr. Chairman.

Welcome, Minister. It's your first appearance at the finance committee, and the chairman's been very kind so far. He has a mean streak, I'm just warning you.

Minister, we have a great record of tax relief in Canada and a great record as a government, with nearly $3,400 per family in personal income tax relief having been provided, a low corporate income tax rate, and a low business income tax rate. At the same time, there's always more to do.

Here, I think one of the really successful pieces in this budget was the search and rescue volunteers tax credit. Often this type of legislation is overlooked, quite frankly, but in this case it gives back to the community. We depend upon these individuals in rural Canada. Often they can't, in a small fire department or a small search and rescue unit, get enough volunteer hours to actually qualify for the tax credit. So can you explain the changes that budget 2014 brings down, that economic action plan 2014 brings down, to really help these individuals?