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.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Chair, on Liberal amendment 165-106, which pertains to clause 165 of Bill C-45, I would like a recorded vote.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order. This is the 94th meeting of the Standing Committee on Finance dealing with Bill C-45.

Colleagues, we last dealt with clause 61 and we'll now move to clause 62.

(On clause 62)

I have amendments LIB-116, LIB-117, LIB-118, LIB-119, LIB-120, and LIB-121, as well as NDP-10.

On LIB-116.

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

Thank you, Mr. Chair.

We have focused our amendments on substantive changes to this omnibus bill, Bill C-45, because we believe that Canadians would want us to debate the substantive issues here.

We're very concerned about the changes to the SR and ED tax credit, the research and development tax credit, in clause 9 and later on in clause 27. In essence these changes will cut $500 million annually to research and development for business in this country. We already know that our business expenditure on research and development intensity, which is a key factor in productivity growth, is less than half of our U.S. neighbours and well behind the OECD average, and it is declining.

We live in a challenging global economy and we must innovate in order to compete, but sadly the Conservatives are taking Canada in the opposite direction. These changes will hurt innovation in Canada, and as we've heard from companies, it will drive them to reduce the research and development activities dramatically or shift their activities to other jurisdictions.

The changes we are proposing will give more time for consultation and a more balanced approach to improving the SR and ED program and other government supports for innovation. There has been talk about offsetting the changes to the SR and ED program with possible future funding, but, sadly, we haven't seen that, and businesses are making decisions right now. We think that any attempt to try to balance the books at the cost of innovation, at the cost of research and development, will just harm our economy and is short-sighted and poor economic management.

Some of the specific changes that are included here in these cuts, for example, would eliminate the eligibility of capital expenses and reduce the eligibility of contract payments to just 80%. These cuts will total more than $100 million by the Department of Finance's estimate, but as we've heard from the Canadian Manufacturers and Exporters, they believe the true cost might even be as high as double that amount.

In our proposed amendments NDP-1, NDP-2, and NDP-3, we would delay the Conservative changes by five years. We disagree with the Conservative rush to impose these major cuts to support business research and development at a time when our economy needs greater investment in innovation.

The cut to the amount of contract payments for eligible SR and ED credits from 100% to 80% will hurt specialty research and development businesses and contractors. It will also increase the cost of R and D initiatives for companies and could push the marginal projects to other jurisdictions, which would cost Canadians jobs, reduce our innovation outcomes, and further erode the business expenditure on research and development.

We also oppose the cuts to capital eligibility, which we believe will disproportionately hurt sectors that depend on capital-intensive R and D, such as pilot plants, and given the increasing competition from low-wage countries, Canadian manufacturers must increasingly innovate.

We've heard from the Canadian Manufacturers and Exporters, who conducted a survey of their members, that 69% would reduce their R and D spending and 18% would relocate R and D activities outside Canada as a result of these Conservative cuts. That's why we believe these cuts should be postponed. We need to consult more and we need to have a practical plan to boost research and development and innovation and not cut business opportunities and jobs here in Canada.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

That's been the common practice in all of our meetings on Bill C-45.

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

Mr. Chair, we have several amendments to clause 5.

I'd like to first of all discuss the overall issue of the shareholder debt. Subsection 15(2) of the act requires that certain shareholders' indebtedness be included in the income of the debtor. Where the debtor is a non-resident, subsection 15(2) works in conjunction with subsection 214(3) to deem a dividend that is subject to non-resident withholding tax under part XIII of the act. Subsection 15(2) is amended in two ways.

First, the French version is amended to correct an unintended inconsistency in terminology by replacing the expression “contracter une dette”, to incur a debt, with the expression “devient la débitrice”, has become indebted. Subsection 15(2) was amended in 1998 by S.C. 1998, c. 19, subsection 17(1).

Mr. Chair, I'd like to draw to the committee's attention to some of the representations we've received on these changes, particularly some of the representations we've received from the TMX, the Toronto Stock Exchange. They have expressed concerns. The TSX is writing to express concerns with the foreign affiliate dumping provisions as contained in Bill C-45. The TSX says:

It is our belief, based on careful analysis, and discussions with issuers and other market participants, that in their current form, the Proposed Rules could have a significant negative impact on the efficiency and effectiveness of Canadian capital markets as well as Canada's reputation as a global leader in resource financing and listing.

This is important, Mr. Chair. This is the TSX saying that these changes will have a very negative impact on natural resource financing and the natural resource sectors in Canada. They go further to say:

We are concerned that the Proposed Rules could unnecessarily penalize hundreds of issuers on our markets, leading to a negative impact to the entire eco-system of legal and financial advisors, geologists, engineers, and the resource sector analysts that depend on the leadership of Canadian markets in the global resource sector to earn their livelihood.

Mr. Chair, it's important to remind the committee that over the last five years, 80% of mining transactions or financings in the world were transacted in Toronto. So the TMX warns us that these changes will have a deleterious effect on Canada's capacity to remain a leader in this area, which is creating a lot of jobs in Toronto, but also a lot of jobs across Canada within these sectors, and it's also increasing the reach of Canada's extractive sectors and Canada's extractive companies around the world, with the capacity to create jobs in Canada and globally. I think we should take this warning from the TMX very seriously.

They go further:

As operators of Canada's two leading equity exchanges we believe we have a central view of the issues being raised by the Proposed Rules.

We believe that the Proposed Rules, in their current form, cast too wide a net and risk impacting or diminishing legitimate and entirely appropriate activity by hundreds of publicly listed companies on our markets. Should the rules be introduced without further appropriate amendment, Canada's world-leading position and reputation as a market for resource issuers may be negatively impacted by creating inefficiencies in accessing capital and harming corporate valuations.

This speaks particularly to members from Toronto. This is going to have a terrible impact on the financial industry in Toronto. It will have a very negative impact on our resource sector, which employs Canadians in every province.

This is from the TMX, Mr. Chair:

Based on our preliminary research, we estimate that in excess of 700 publicly-traded Canadian corporations with operations in a foreign jurisdiction could potentially be inadvertently and inappropriately impacted by the Proposed Rules, in particular by the “indirect acquisition”—

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

Mr. Chair, I challenge your interpretation of your decision. Effectively, your interpretation of this is that the rejection of your earlier decision by the committee means automatically that we support Mr. Jean's interpretation, and I would assert that this is not consistent with any parliamentary precedent or rule. As such, I would challenge that, so I challenge your decision.

If I may, Mr. Chair, the fact that the committee voted to repudiate its own chair does not tell us what the procedure will be. It tells us what the procedure is not.

The vote of the committee doesn't substitute the chair's view with the government's view. It merely leaves us without a procedure because the chair's obvious interpretation of the motion has been overturned.

The overturning of the chair is a blunt instrument that can't be used to selectively amend a lengthy motion through the back door. If they want to do that, they should move a motion for that purpose. It is possible to move a motion for that purpose.

If the government wants us to follow a procedure that was (a) not part of the normal practice and (b) not part of the motion we adopted to govern our work on Bill C-45, they need to move a motion to establish such a procedure. Without such a motion, we must revert to our basic procedure, which means to debate every clause, without time limits on debate.

If the government wishes to propose a new procedure, let them propose a motion for that purpose. If not, let's begin clause-by-clause under our normal rule of no time limits. It's embarrassing to see the Conservatives repudiate their own chairman to save themselves from what seems to have been bad drafting, but they rammed this motion through here in the first place. They didn't allow amendments to improve it—

[The Chair, Conservative, James Rajotte]

I call back to order this 94th meeting of the Standing Committee on Finance. We're resuming our study of Bill C-45.

Colleagues, I want to run through exactly what's going to happen here.

I outlined at the beginning issues with respect to time allocation, end of debate, and the amendment from Dr. Fry.

Mr. Jean asked me as the chair for clarification; I presented the clarification, the interpretation that I had. He presented an alternative interpretation with respect to the “end of debate” section. I have ruled that his interpretation is incorrect. Therefore, Mr. Jean challenged the ruling of the chair with respect to my interpretation.

I'll read from chapter 20 of O'Brien and Bosc:

Decisions by the Chair are not debatable. They can, however, be appealed to the full committee. To appeal a decision by a Chair, a Member must inform the committee of his or her intent immediately after the decision is announced. The Chair then asks the committee to vote on the following motion: “That the decision of the Chair be sustained”.

And I will ask for that motion.

I'll just finish up here.

If my ruling is sustained, we will proceed as I previously explained. If my ruling is overturned, then Mr. Jean's interpretation will stand.

As the chair, I will give any member the opportunity to withdraw any motions in the package that they do not wish to proceed with, if we go with Mr. Jean's motion, because if we go with Mr. Jean's interpretation, what it means is that we consider all amendments deemed to be moved.

That's as full an explanation as I can give. Therefore, I will put the following motion to the committee—

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I do have a point of order on that, Mr. Chair, and as you know, no one respects you and your position and your history in this place more than I, and I understand you're bound by the rules. But on that point of order, Mr. Chair, I would ask you to consider the motion adopted by the committee on October 31 as allowing us to vote on every amendment to Bill C-45 that has been put on notice.

I can tell you our intention—I know through discussions on the government side—was to maximize study and deliberations on this bill while keeping to a reasonable working plan, so that of course we could get things done. By asking 10 other committees to study portions of this bill as part of it, and, if they saw fit, to suggest amendments, which would be considered here, and by confirming that members of this committee were not going to be blocked at any stage from tabling their own amendments either, according to the rules, we wanted to give the fullest possible airing for all of the important measures set out in our budget implementation bill, and that, of course, includes the opportunity to vote and voting itself.

The motion says at 11:59 p.m. the chair is to put “each and every question necessary to dispose of clause-by-clause consideration of the Bill”.

Now, Mr. Chair, to limit it to just the clauses is not, in my mind, reasonable. Today's notice of motion said we were to give the bill clause-by-clause consideration, yet we will be dealing with amendments up until midnight. How is it that those words take on a different meaning at midnight and after than before?

I believe the words “each and every question” includes every one of the amendments filed by every party in this place, which have been duly filed with the committee clerk.

When the House adopts a time allocation motion, it uses the same phrases about, and I quote again, “every question necessary for the disposal of the stage” being “put forthwith and successively without further debate or amendment”.

When the time allocated period ends, the speaker still puts every selected stage motion to the House. Taking Bill C-38, for instance, 15 motions had been moved when report stage debate was interrupted, yet the House voted on all of the selected report stage motions, not just 15.

The same logic that happens in the House should apply to the same wording here, Mr. Chairman, in my respectful submission.

While I will admit, of course, that committees are somewhat different from the House, in which ways are they really different? For example, motions here do not need seconders, the previous questions cannot be moved here, and unless a committee orders, there are no limits on the length or number of speeches a member can make.

Now, Mr. Chair, all of those things have in common a view to expand participation by the committee members and all parties, not to limit it.

My position, I think, supports fairness, due process, and the rule of law, and certainly the ability to speak your constituents' voice. So I do not think it would be logical to interpret our motion of October 31 in a way that is even more restrictive than how the same words would be interpreted in the House, particularly, Mr. Chair, as the spirit of the committee rules is to allow for more participation.

If it is your ruling, Mr. Chair, that we cannot vote on the amendments, which were duly filed with the committee clerk, then I must challenge the chair.

[The Chair, Conservative, James Rajotte]

A motion to adjourn debate on Ms. Nash's motion.

(Motion agreed to [See Minutes of Proceedings])

I will therefore move to our clause-by-clause discussion of Bill C-45, a second budget implementation act.

You all have a copy of the motion that was adopted by the committee to deal with the bill in front of you. I would like to ask you all to review it and read it again.

I want to outline for members the motion adopted by the committee on October 30, 2012, in relation to the study of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures. I would like to remind the committee of certain important elements of this motion.

First of all, with respect to the timing, in paragraph (d) of the motion adopted by the committee, it states that:

...the Chair may limit debate on each clause to a maximum of five minutes per party per clause before the clause is brought to a vote;

So it's five minutes per clause. This is prior to 11:59 p.m., not for amendments. I just want to make sure everyone understands that.

I have two more items. The second is with respect to the end of debate. Paragraph (f) of the motion adopted by the committee states:

(f) if the Committee has not completed the clause-by-clause consideration of Bill C-45 by 11:59 p.m. on Wednesday, November 21, 2012, the Chair shall put, forthwith and successively, without further debate or amendment, each and every question necessary to dispose of clause-by-clause consideration of the Bill....

So at that point I will deal with all of the clauses that are left, if we have not completed our work by 11:59 p.m. That is the second point I want to make.

The third point is an amendment that has been sent to this committee. As you recall, the motion called for the chair to communicate with other committees and invite them to submit suggested amendments to the finance committee. I have received answers from all of the committees, none of which have forwarded any amendments.

However, there is an amendment from a member. This amendment will be considered by the finance committee according to paragraph (c) of the motion. This amendment is from Dr. Fry , who is a member of the health committee.

In paragraph (c) of the motion adopted by the committee, it states:

(c) any amendments suggested by the other Standing Committees...shall be deemed to be proposed during the clause-by-clause consideration of Bill C-45....

To explain this so that everyone understands, if we go past 11:59 p.m., at that point I will just be putting the votes on the clauses. If we have amendments left to deal with, I will not be putting forward votes on those amendments.

[The Chair, Conservative, James Rajotte]

Thank you for that clarification, Madam Glover. I'll just refer members to O'Brien and Bosc, page 1057:

A member who moves “That the debate be now adjourned” wishes to temporarily suspend debate underway on a motion or study. If the motion is carried, debate on the motion or study ceases and the committee moves on to the next agenda item.

And that would obviously be discussion of Bill C-45.

Therefore, I will call the question on that, that the debate be now adjourned.

(Motion agreed to [See Minutes of Proceedings])

We will therefore move to discussion of Bill C-45.

Monsieur Caron.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is the 94th meeting of the Standing Committee on Finance. Our orders of the day are pursuant to the order of reference of Tuesday, October 30, 2012. This is our study of Bill C-45, a second act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.

Colleagues, before we get into the clause-by-clause consideration, we do have a notice of motion from Ms. Nash. I think we should deal with that item first, since we do not know how long we will be dealing with clause-by-clause.

Ms. Nash, I give the floor to you, please.

First Nations Financial Transparency Act

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Mr. Speaker, this afternoon we are discussing Bill C-27, which claims to promote financial transparency on the part of the first nations. I am very proud to be firmly opposed to this bill, which does not enhance the accountability of first nations governments to their people.

Essentially, Bill C-27 lays the legislative groundwork for the preparation and disclosure of first nations’ consolidated financial statements and disclosure of the remuneration, in salaries and expenses, paid by the first nations to their elected leaders. The bill would apply to more than 600 first nations communities.

As I said, the NDP opposes this bill, even though we are actively working to improve transparency and accountability at all levels of governance. First, we oppose this bill because it was imposed on the first nations without consultation and because it is contrary to the commitment made by the Prime Minister in January 2012 to work with the first nations. The approach taken by the government is a paternalistic one. In fact, the Conservatives have introduced other bills in this House that were drafted without proper consultation with the first nations.

Second, we oppose measures that would add further to the burden that the first nations bear when it comes to disclosure. We know that the first nations are already buried in paperwork. The former auditor general, Sheila Fraser, in fact, came out in favour of streamlining the tasks associated with disclosure of financial information that the first nations have to complete. She thought that the paperwork had gotten worse in recent years and pointed out that the first nations were already required to file a number of reports that were not even used by the ministers of the federal government.

In 2002, she estimated that four federal organizations alone required at least 168 reports a year from first nations communities, many of which had populations of less than 500. In a subsequent investigation by the Office of the Auditor General, representatives of Indian Affairs and Northern Development Canada revealed that in a single year, that department alone received more than 60,000 reports prepared by more than 600 first nations. That is an unbelievable figure. Why is the Conservative government demanding more and more of these pointless forms and reports?

Aboriginal leaders need to be able to devote their energies to the urgent problems affecting their communities: education, access to clean drinking water and housing.

Much has been said about the new requirements regarding disclosure of the salaries paid to leaders of aboriginal communities. Bill C-27 requires that the first nations disclose the details of the remuneration—salaries, commissions, bonuses, fees and so on—paid by the first nation and by any entity controlled by the first nation to its chief and each of its councillors in their professional and personal capacities.

I see a lot of hypocrisy in this situation. First, in accordance with the year-end financial reporting handbook, the first nations have to submit audited consolidated financial statements to the minister annually concerning the public funds they receive, including salaries, honoraria and travel expenses for all elected or appointed officials and all unelected senior officials of the band. In addition, the first nations have to distribute those financial statements to their members.

I say hypocrisy because, in reality, the average salary of aboriginal leaders in Canada is not exorbitant. We are talking about approximately $60,000 a year for the chiefs and $31,000 for the councillors. In addition, I should point out that in many cases, more is demanded of the leaders of aboriginal communities than of other public officials.

Consider the example of Nigel Wright, the Prime Minister's chief of staff, or his other close advisors. Although their salaries are governed by Treasury Board standards, the public has no access to information on how much they earn or the total amount they receive annually in expense reimbursements. Yet this is what is required of the elected representatives and senior officials of aboriginal communities.

How can the Prime Minister demand transparency from others and not from his own office? It smacks of a double standard. In my opinion, what is good for the goose should be good for the gander.

It is important to understand that under federal law, aboriginal communities already have to disclose their audited financial statements to the federal government, including the salaries, honoraria and travel expenses of the elected representatives of the band.

The first nations already publish their audit reports, and some regularly hold consultations with their members. In some respects, I would venture to say that the bill is even pointless. For example, should the government wish to change the way first nations' financial statements are presented, it could simply revise the funding agreement requirements. That is what the NDP Is proposing. Moreover, it should be pointed out that the first nations were not spared this Conservative government’s irresponsible cuts.

On this side of the House, we want to see the government work alongside the first nations in order to improve governance, which has not been done in this case. The Conservatives eliminated funding for institutions that support governance, including the First Nations Statistical Institute and the National Centre for First Nations Governance. Clearly, the government pays lip service to improving governance in aboriginal communities, while simultaneously doing away with the tools required for good governance.

It is particularly ironic that the government feels the need to lecture the first nations about transparency when this Conservative government is probably the most opaque in Canada's history. How can the government talk about transparency when it has introduced two omnibus bills comprising over 800 pages in an attempt to avoid parliamentary scrutiny? Indeed, I would remind members that Bill C-45 reduces the powers of the Auditor General and ensures that 12 government agencies will no longer be subject to any oversight whatsoever.

Moreover, I would like to remind members that Kevin Page, the Parliamentary Budget Officer, is having to take the Conservative government to court to force the departments to disclose the impact of the budget cuts on services and programs for Canadians.

Speaking of hypocrisy, let us talk about the Conservatives' lack of transparency around the approval process for the CNOOC-Nexen deal. From the get-go, the Conservatives have refused to inform parliamentarians and the public at large as to the impact of the takeover. We still do not know if CNOOC will protect Canadian jobs and the headquarters in Canada. Neither do we know the extent to which Canada will be able to enforce its own environmental standards. By studying this transaction behind closed doors and failing to specify the criteria they are using to determine what constitutes a net benefit to Canada, the Conservatives are demonstrating a shameful lack of transparency.

In turn, Auditor General of Canada Michael Ferguson is accusing both the Department of National Defence and Public Works of concealing the actual costs of the F-35 and circumventing the government's own procurement rules. Worse still, the Auditor General's report clearly states that the Conservatives knew the total costs of the F-35, $25 billion, and chose not to share that information with the House. The Conservatives can say they support transparency, but they show a great lack of transparency in the House.

If I have digressed, it is only to show how despicable it is for the Conservatives to give anyone lessons on transparency when they themselves show such strong contempt for accountability. We attempted to minimize the negative impacts of this bill in committee by bringing forward amendments, all of which were rejected by the government.

For these reasons, I am proud to oppose this bill in the House, and I look forward to answering hon. members' questions.

Motions in Amendment

[Jasbir Sandhu, NDP, Surrey North, BC]

Mr. Speaker, I am honoured to rise on behalf of my constituents in Surrey North to speak on Bill C-27, an act to enhance the financial accountability and transparency of first nations.

I will speak to accountability and transparency in a moment, but I would first point out that the bill is fundamentally flawed in failing to address the real issues that we should be talking about in this House, the real issues affecting our first nation communities, including in northern British Columbia, Alberta and across the Prairies to Ontario and the rest of the country. Those real issues are housing, jobs, education and running water for our first nation young people.

It is a fundamental flaw in the bill that we are not discussing these issues that have affected our first nations for many years. We should be discussing these issues in the House to improve the lives of our first nation people. Yet, the Conservative government has failed to address any of these issues that need to be addressed.

Before starting out with a bill, it would make sense to consult the very people it would affect. We have heard in this House and at committee that the government has failed to address the concerns of first nations by listening to them, the very people the bill would affect.

It is not just about listening, but also about making changes to the bill to improve accountability and transparency. As we heard in committee, New Democrats produced a number of amendments that would have improved the bill, yet the Conservatives did not want to listen to them or make the changes.

From the Conservatives we have seen no accountability and transparency. There was no accountability by the Minister of Agriculture when it came to the XL Foods debacle. We saw no transparency or accountability from the Minister of National Defence or the Associate Minister of National Defence when it came to the F-35s. My colleague from northern Ontario talked about the lack of accountability in Aboriginal Affairs and Northern Development Canada in his speech, referring to a “black hole of accountability” there.

I think that accountability and transparency has to start with the government being accountable to the taxpayers of this country. However, the current Conservative government has failed to be accountable and transparent.

Despite hearing about transparency and accountability from the other side of the House, we have Bill C-38 and now Bill C-45, the omnibus budget bills. The Conservatives failed to properly consult on these bills and to put them into the right committees to look at the issues affecting Canadians. I am taken aback when Conservatives talk about accountability and transparency, because the current government has not shown any of that when it comes to a number of issues that have been raised in the House.

There are a number of so-called transparency and accountability issues the government brings up in the bill. I want to highlight them and look at whether there really is transparency and accountability and if things are in place already addressing some of those concerns.

The bill would require every first nation, except those with self-government regimes, to produce an audited annual consolidated financial statement; a separate annual schedule of remuneration covering the salaries, commissions, bonuses, fees, et cetera, paid by the first nation and any entity controlled by the first nation through its chief and each of its councillors in their professional and personal capacities; an auditor's written report respecting the consolidated financial statement; and an auditor's report respecting the schedule of remuneration.

For each of these four documents, the bill requires each first nation to provide it within four months upon request of any of its members, and to publish the document on its website and retain it there for over 10 years. Here is the kicker: the minister must also publish the document on the website of the Department of Aboriginal Affairs and Northern Development. Failure of the first nation to comply with these requirements of the bill enables the minister to withhold any funds to first nations, and the minister can also terminate any funding agreement with first nations.

We heard from the previous speaker about the minister arbitrarily having these powers and the ability to withhold money for the very issues that we need to address. We saw him last winter withholding money for three months from first nation schools in northern Ontario communities.

There is a whole bunch of requirements now being put on first nations to report this stuff. I think these onerous requirements are already in place, because we can get that information already. However, I do know that the Conservatives have to play to their ideological base and interest groups to make it look like they are actually addressing the issues of first nations.

Again, if they were really concerned about addressing the real issues in our first nation communities, we would be discussing housing for first nations. We would be discussing education for every child and adult in first nations. We would be addressing water issues in first nation communities.

I have listed a number of requirements of the bill that will put an onerous burden on first nations. I also want to let the House and the people who are listening know that there are certain mechanisms in place that already incorporate some of these things. The current policy based requirements include the fact that the majority of the funding arrangements between Canada and first nations are in the form of fixed term contribution agreements under which first nations must satisfy certain conditions to ensure continued federal contribution payments. The requirements for financial reporting are also set out in AANDC's year-end financial reporting handbook. Under the year-end financial reporting handbook, first nations must submit to AANDC annual audited consolidated financial statements for which public funds are provided to them. These include the salary, honoraria, and travel expenses of all elected, appointed and senior unelected band officials. The latter basically include unelected positions, such as those of executive director and band manager.

Therefore, we already have in place arrangements where first nations provide this information when they sign agreements with the government for the funds available to them.

New Democrats are opposed to this legislation, as it will be imposed on first nations. We need to work in collaboration with first nations to come up with a framework to address the real issues that are of concern to them and Canadians. This has been going on for many years. We need to take a look at these issues. We should be discussing first nations' housing, education and running water. These are the real issues affecting our first nations, yet the government has consistently failed to address them.

[The Chair, Conservative, David Tilson]

We will continue with Bill C-45. There have been no amendments that the clerk has received from any member of the committee, but that does not preclude members of the committee from giving us an amendment now. If there are amendments, we'd have to give time for Mr. Méla, who's going to advise us as to whether the amendments are appropriate or not. Even that's a little strange, because ultimately, only Mr. Rajotte can determine whether an amendment is in order because he's the chairman of the finance committee, so we'll play that one by ear.

However, if we're going to communicate with the finance committee, that must be done by four o'clock today. We have Ms. Welbourne and Mr....

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

moved:

Motion No. 1

That Bill C-27 be amended by deleting Clause 1.

Motion No. 2

That Bill C-27 be amended by deleting Clause 11.

Motion No. 3

That Bill C-27 be amended by deleting Clause 13.

Mr. Speaker, for the public watching, Bill C-27 would:

...[provide] a legislative basis for the preparation and public disclosure of First Nations' audited consolidated financial statements and of remuneration, including salaries and expenses, that a First Nation or any entity that it controls pays to its elected officials.

Also, it would require that this information is published “on a website maintained by or for the First Nation,”. This is from the legislative summary prepared for the House.

I have proposed three amendments to the bill and I will speak specifically to those three amendments. One of them would delete the short title because, as always, the titles are often misleading. When we are talking about financial accountability and transparency, one would expect that the government would provide resources so first nations would have the ability to do some of the things that are being requested of them, and that there would have been adequate consultation before this bill was put forward.

The two sections of the bill that I propose deleting include clause 11. This clause of the bill allows “...any person...may apply to a superior court for an order requiring the council to carry out the duties under that section...”. Through the bill, an additional burden is being placed on first nations by allowing members of the general public to take a first nation to court if they do not feel that the information is published as required under the legislation. Nobody would argue that leadership in first nations should not be accountable to their own members but the bigger concern is having anybody being able to put this additional burden on first nations.

The third clause that I suggest we delete is the administrative measures clause. It would vest far too much power with the minister. This would allow the minister to “withhold moneys payable as a grant or contribution to the First Nation...” if they are in breach of the legislation, and that the minister would be able to “terminate any agreement referred to in paragraph (b)”. We would see more power being vested in the minister, which is a dangerous trend that we see throughout the current government.

I will touch on where this legislation came from and why we as New Democrats have some serious problems with it. In the legislative summary, it is pointed out that currently first nations communities have an estimated average of 168 reports and that in some communities that goes up to 200 reports that are required by the federal government. In December 2006, the Auditor General pointed out that “AANDC alone obtains more than 60,000 reports a year from over 600 First Nations, [and the Auditor General] concluded that the resources devoted to the current reporting system could be better used to provide direct support to communities”.

Any of us who have first nations communities in our ridings can attest to the fact that we have serious problems in many communities, whether it is housing, drinking water or education, and we continue to see these problems grow. The government has not committed the resources, the attention or the building of the relationship to ensure some of these problems are dealt with.

The reporting burden on first nations is not new information. In 1996, the Auditor General issued a report dealing about the reporting, and that has gone on report after report. It is not just first nations and the Auditor General who are talking about the problems. We also have a Conservative blue ribbon panel from December 2006 which wrote a report entitled, “From Red Tape to Clear Results”. In that report, the panel devoted a special section to the first nations, Inuit, Métis and other aboriginal organizations.

The report states:

The panel is of the view that mechanisms other than grants or contributions for the funding of essential services such as health, education and social assistance in reserve communities are needed....

It went on to say:

[W]e were reminded that the current practice of treating these kinds of transfers to First Nations, Inuit, Métis and Aboriginal organizations as more or less standard contribution arrangements is fraught with problems and leads to a costly and often unnecessary reporting burden on recipients.

That was the Conservatives' own panel and we have not seen the kind of action needed to deal with these reporting requirements. The assistant auditor general appeared at committee with a prepared statement on October 29, 2012. He stated:

At that time, we met with first nations and were told that they were willing to explore ways to ensure that the information needs of Parliament were met, and they stressed the importance of internal accountability. From their perspective, accountability is non-hierarchical and is based on shared objectives. They stated that the reporting framework was of limited value to them, was onerous, and did little to enhance accountability to the community.

That is a very important point because the bill is being sold as enhancing accountability in communities. If I have an opportunity, I am going to read a statement by the Canadian Bar Association about why simply posting numbers on a website does not necessarily enhance reporting accountability within communities. I am sure many people in the House could speak to the fact that we also need resources provided to communities so that community members actually have the knowledge to interpret the financial statements.

Financial statements, in and of themselves, do not speak to whether people are getting good results for their dollars. They are not talking about benchmarking the number of houses built, the number of children attending school or the number of people who now have access to clean drinking water. A financial statement does not provide that information. People say that by putting numbers on a website, accountability is somehow miraculously going to occur.

First nation leadership and community members would all agree that it is important to have accountability between chiefs and councils and their membership. The Assembly of First Nations back in 2006 produced a position paper entitled, “Accountability for Results”, which contains numerous suggestions about how accountability could be improved both from the federal government to first nations, because that is one accountability measure that is currently not in place, and second, from chiefs and councils to their memberships. It was an amendment the NDP proposed, but of course, it was voted down.

One of the proposals that the Assembly of First Nations made was that there should be an ombudsperson. The proposal stated:

[First Nations]-led and [First Nations]-specific institutions will be needed, as First Nation citizens must be empowered to hold both their local government and the Government of Canada to account. Such institutions include an Ombudsperson's office, so that individuals have a trusted venue to pursue accountability concerns outside of either the local or federal governments. They would also include a First Nations Auditor General who could both provide ongoing advice to assist [First Nations] governments in providing accountability and, at the same time, improve accountability by exposing problems and recommending solutions.

First nation leadership across this country has been at the table consistently proposing solutions to the government and the government has failed to act on any of them. One of the big sticking points about this piece of legislation is the fact that there was not appropriate consultation. I would be remiss if I did not quote from the UN Declaration on the Rights of Indigenous Peoples. Article 19 states:

States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them.

Once again there is a piece of legislation before the House that does not have that free, prior and informed consent. One would think, given that the government almost a year ago committed to a new relationship, that it would have that free, prior and informed consent before bringing legislation forward. We are seeing bill after bill being introduced in the House without that kind of consent.

In fact, an official from the department yesterday talked about omnibus Bill C-45, clauses 206 to 209 in division 8, and said that it was fine for the government to go ahead without that free, prior and informed consent because, after all, they were just technical amendments. That is simply not good enough in this day and age. If the government is committed to a new relationship, it should make sure that it goes beyond engagement and consults with first nation communities across this country and ensures that legislation is what first nations are asking for.