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.

[Michelle Rempel]

Well, my apologies to the witnesses. I would like to thank you for coming out today to talk about the amendments, but I do have to address some of my colleague's points here.

We started our meeting off today with my colleague opposite asking for additional time on Monday to have further witnesses, which I, Mr. Chair, am amenable to. I am more than happy to allow this to happen, to look at other times to deal within a subcommittee, but I have a conflicting message from my colleague here and, frankly, I am outraged.

We have a history of working well in this committee. We have witnesses sitting here who are ready to talk to.... I think there are only eight clauses here, seven of them minor concordance issues, but we have the opportunity today to look through this. We made a decision as the committee to review this component of the bill, and yet we've just spent half an hour of the time of the witnesses who proposed these.... In fact, we have the vice-president of policy for the Canadian Environmental Assessment Agency here to look at these clauses today, and we just spent half an hour talking about why we shouldn't be looking at them. I'm not sure what the NDP's message is on this, frankly.

Do you want to review these clauses or not? Frankly, I do. I cannot believe that we just sat here talking about this after we've been trying to find additional time for witnesses to come out and to work collaboratively to review these amendments. Frankly, I'm flabbergasted.

As committee members, we've had over a week with this letter in front of us, whereby we could all do our due diligence on the technicalities of each aspect of the clauses. I've certainly done that. I know that my colleagues down the way have done that as well. They've sent me questions that we've been trying to work back and forth on in trying to get clarification to make sure that it's consistent with the existing legislation—point blank, doing our jobs as legislators instead of sitting here and talking about whether or not we should be looking at this.

I'm just not sure what the message is today. I cannot believe that we just spent half an hour doing that.

Mr. Chair, I do appreciate your ruling on this, but the last point I'm going to make on this is something that I want on the record, and that's that my colleague said that we have a fake belief for meaningful discussion on these clauses here today. We gathered here as a standing committee of the Parliament of Canada to review these. It was a decision that our committee made, and to say that in front of witnesses who are here, and who are technical experts on the subject, is frankly outrageous. I certainly hope that my colleagues will get their message in alignment, that will work with us.... If there are additional witnesses we need to have on Monday and work on a subcommittee on Monday afternoon—whatever—to meet the deadline that has been tasked with us by the finance committee, I am more than amenable to that. I will put that on the record right now, Mr. Chair.

I certainly hope that we can take the rest of the time to review the amendments with the witnesses who are here. Let’s move on.

Ms. Cutts, do any of the proposed amendments to CEAA 2012 in Bill C-45 represent a change in policy intent?

[François Choquette, NDP, Drummond, QC]

I have a point of order.

I assert that the Standing Committee on Environment and Sustainable Development lacks the authority from the House to propose amendments to Bill C-45 or to issue a report to the Standing Committee on Finance and therefore that we should not participate in this clause-by-clause hearing.

Let me remind this committee of where we, as a committee, derive our authority to do the things we do. We derive our existence and our authority from the House of Commons itself. The House creates our committee specifically through Standing Order 104, and the Standing Orders further regulate how our committees are constituted and governed under Standing Order 106.

The House also sets out the specific mandate of each standing committee under Standing Order 108. An excellent summary of this regime can be found in the book entitled House of Commons Procedure and Practice, commonly called O'Brien and Bosc. On pages 960 and 962, referring to standing committees, the document reads:

They are empowered to study and report to the House on all matters relating to the mandate, management, organization and operation of the departments assigned to them. More specifically, they can review: the statute law relating to the departments assigned to them; the program and policy objectives of those departments, and the effectiveness of their implementation thereof; the immediate, medium and long-term expenditure plans of those departments, and the effectiveness of the implementation thereof; and an analysis of the relative success of those departments in meeting their objectives. In addition to this general mandate, other matters are routinely referred by the House to its standing committees: bills, estimates, Order-in-Council appointments, documents tabled in the House pursuant to statute, and specific matters which the House wishes to have studied. In each case, the House chooses the most appropriate committee on the basis of its mandate.

Please note that all the abilities cited in this citation flow from the House, not from another committee.

So let us look at what we have here with Bill C-45.

On October 18^th of this year, following the adoption of Ways and Means motion 13, the Minister of Foreign Affairs moved, on behalf of the Minister of Finance, that Bill C-45 be read a first time and printed. In October, the Minister of Public Safety moved that Bill C-45 be read a second time and referred to a committee, and after using time allocation, the debate on the second reading of Bill C-45 ended with the passage of the following the motion on October 30^th of this year:

that Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures be now read a second time and referred to the Standing Committee on Finance.

Hansard on October 30^th, immediately following the passage of the motion in the House, specifically quotes the Speaker saying:

I declare the motion carried. Accordingly, the Bill stands referred to the Standing Committee on Finance.

The reference of this bill to committee was always only to the Standing Committee on Finance. The motion passed in the House referred only to the Standing Committee on Finance.

This is important, Mr. Chair. Under the legislative process that the House of Commons follows, a bill can only be referred to a single committee, the committee assigned by the House itself. This does not preclude any other committee from studying the subject matter of the sections of this omnibus bill. The official opposition has always advocated that this bill be split up, and effectively studied. The official opposition actually proposed a series of motions in the House to split this bill, using the same method as was used to pass Bill C-46, the MP pension plan provisions. Sadly, the House did not adopt those motions.

Those motions would have allowed this committee to actually study the separate bills which would have been referred to them, and then each committee could legitimately hold hearings, calling a variety of witnesses, with multiple viewpoints, and then, after hearing these points of view on the sections of the bill referred to them, could formulate reasoned amendments for debate and decision in a clause-by-clause meeting, and then the decision of the committee would be reported to the House in due course.

The traditional practice of committees to allow witnesses to be called from a variety of sources is being overridden by this fake belief that our committee will somehow have a meaningful clause-by-clause consideration of the parts of the bill referred to them by the Standing Committee on Finance.

There is another problem. We are being asked by the Standing Committee on Finance, not the House, to study and propose amendments to a bill, on such a short time line that, as we have seen, there is no opportunity for reasoned debate. In fact, we were not able to invite some witnesses to our meeting today, given the very short timelines. The process has been corrupted.

I wish to relate to you all one line from O'Brien and Bosc on committee reports. On page 985, it says:

In the past, when a committee has gone beyond its order of reference or addressed issues not included in the order, the Speaker of the House has ruled the report or a specific part of the report to be out of order.

I submit to you, as the Chair, that the Standing Committee on Finance is unable to refer any parts of Bill C-45 to anyone. Their only duty is to study this bill and to report back to the House with or without amendment.

Let me review quickly how a committee is supposed to deal with a complex bill referred to it by the House after second reading.

Normally, after passage at second reading, the committee which received the bill would organize its time, call for a variety of witnesses based on the lists provided by the recognized parties in proportion to their representation at the committee, hear the witnesses, formulate amendments, schedule a clause-by-clause meeting, call each clause, hear amendments to the clauses, vote on the amendments and the clauses, and then vote on the bill. The results of these decisions would then be reported to the House.

The House, in its wisdom, has even provided a mechanism to allow for a variation on this normal progress of a bill through committee, which it called the motion of instruction.

I refer once more to O'Brien and Bosc, this time in the chapter on legislative process on page 752:

Once a bill has been referred to a committee, the House may instruct the committee by way of a motion authorizing what would otherwise be beyond its powers, such as, for example, examining a portion of the bill and reporting it separately, examining certain items in particular, dividing a bill into more than one bill, consolidating two or more bills into a single bill, or expanding or narrowing the scope or application of a bill. A committee that so wishes may also seek an instruction from the House.

So, if the government was interested in following the rules of this place, and wanted to have a variety of committees study this bill, then it could have moved to instruct any variety of those committees to conduct a review of the portions of the bill, allow amendments to those portions, and to report them separately. But the power to authorize this variance in the legislative process rests with the House of Commons, not the Standing Committee on Finance.

Because we have not received any order of reference from the House, and because there has been no instruction from the House subsequent to the passage of the bill at second reading, I submit to you that it is out of order for this committee to have any vote on any amendment relating to C-45. Unfortunately, our work will have been in vain.

I also submit to you that this committee has the right to initiate a study on the subject matter. In fact, it is really important to do so with the help of witnesses with different points of view. But we do not have the authority to report to another committee, only to the House.

While committees have the power to meet jointly with other committees, a report from a joint committee must report only to the House, not to another committee such as the Standing Committee on Finance.

Once again, I would like to quote O'Brien and Bosc on this. On page 983, when referring to a joint committee, it says:

If a report is adopted during a joint meeting, each committee may present to the House a separate report, even though the two reports will be identical.

So, according to O'Brien and Bosc, Mr. Chair, the report goes to the House, not to another committee.

Mr. Chair, I also refer you to the same chapter, pages 984 and 985, dealing with the way in which a committee can report to the House:

In order to carry out their roles effectively, committees must be able to convey their findings to the House. The Standing Orders provide standing committees with the power to report the House from time to time, which is generally interpreted as being as often as they wish. A standing committee exercises that prerogative when its members agree on the subject and wording of a report and it directs the Chair to report to the House, which the Chair then does.

It is really very clear. I will continue reading:

Like all other powers of standing committees, the power to report is limited to issues that fall within their mandate or that have been specifically assigned to them by the House. Every report must identify the authority under which it is presented. In the past, when a committee has gone beyond its order of reference or addressed issues not included in the order, the Speaker of the House has ruled the report or a specific part of the report to be out of order.

I must remind you, Mr. Chair, the words come from O'Brien and Bosc.

We have rules for committees that show the committees receive their authority from the House, and that also say that committees report their information to the House. The request for us to somehow become subcontractors to shoddy work by the parliamentary assistant to the Minister of Finance should not be given any credence.

I suggest to you, Mr. Chair, that our job is to hear witnesses on Bill C-45 and report findings to the House. I do not believe that we should entertain any amendments to C-45, because the bill was never envisioned by the House as being dealt with at any committee other than the Standing Committee on Finance. I have already made reference to this, and it is very well explained in O'Brien and Bosc in the passages I have referred to above.

I further submit that it flies in the face of all our basic principles of being a committee if we agree that committees should receive their mandates from another committee—that is unheard of—and should then report to that committee rather than to the body which gives us authority, the House of Commons.

With that, I humbly await your ruling and decision on the matters I have just discussed.

[Helen Cutts, Vice-President, Policy Development Sector, Canadian Environmental Assessment Agency]

Thank you very much.

My name is Helen Cutts. I'm the vice-president of policy development at the Canadian Environmental Assessment Agency. It's my pleasure to be with you this afternoon. My opening remarks will not take 10 minutes. That will give us more time for questions.

Division 21 in part 4 of the budget implementation act makes a minor technical amendment to the Canadian Environmental Assessment Act, 2012, or CEAA 2012, as it's known in the short form.

In order to provide some context for members of the committee with respect to the amendments proposed by Bill C-45, I will briefly describe the main features of the CEAA 2012.

This new act was brought into force in July shortly after Bill C-38 received royal assent.

These recent changes to federal environmental assessment are part of the responsible resource development plan. The objectives of this plan are to provide for more predictable and timely reviews, to reduce duplication for project reviews, to strengthen environmental protection, and to enhance consultations with aboriginal groups.

CEAA 2012 focuses on major projects. “Designated projects” is the term used in the legislation. Designated projects are identified in the project list regulations. The Minister of the Environment may also require the environmental assessment of a project not on the list. This scheme replaces the “all in unless excluded” approach of the former act.

Responsibility for environmental assessment has also been consolidated with the Canadian Environmental Assessment Agency, the Canadian Nuclear Safety Commission and the National Energy Board. This replaces an approach that saw the act implemented by 40 to 50 federal authorities each year.

There are additional mechanisms for federal-provincial cooperation. A provincial environmental assessment may substitute for the federal process. At the end of the environmental assessment, the Minister of the Environment makes a decision, informed by the provincial report. Before approving substitution, the minister must be satisfied that the core requirements of CEAA 2012 will be met.

The Governor in Council may also declare a provincial environmental assessment to be equivalent, exempting the designated project from application of the act. The conditions for substitution must be met in this case as well.

The Governor in Council must also be satisfied that the province will make a determination as to whether the designated project is likely to cause significant adverse environmental effects. It will ensure implementation of mitigation measures and a follow-up program.

There are now legislative timelines for environmental assessments: 365 days for an assessment by our agency; 24 months for an assessment by a review panel.

The minister may extend timelines by three months. Additional extensions may be granted by the Governor in Council. There is authority for regional environmental assessments that move beyond a project-specific focus. These are intended to assist with the assessment of cumulative environmental effects.

Finally, unlike the former act, CEAA 2012 includes enforcement provisions.

The amendments proposed by Bill C-45 are intended to address minor inconsistencies in the text of CEAA 2012 that have come to our attention over the past four months of implementation.

Clauses 425 to 427, as well as clauses 429 and 431, are intended to ensure concordance between the French and English versions of the act.

Clause 428 corrects an oversight with respect to conditions that can be put in a decision statement. At the end of an environmental assessment, a decision statement is provided to the proponent of a project. This statement sets out the conclusion as to whether the project is likely to cause significant adverse environmental effects. It also sets out conditions that are binding on the proponent; these are mitigation measures and requirements for a follow-up program.

The amendment proposes broader language with respect to the conditions to ensure that a decision statement can include administrative requirements such as reporting on the implementation of mitigation and follow-up.

Clause 430 clarifies that the obligation for federal authorities to ensure their action with respect to projects on federal lands do not cause significant adverse environmental effects is limited to the environmental effects caused by the components of the project that are situated on federal lands.

Finally, clause 432 proposes to close a loophole in the transition provisions. Currently, there is potential for a project to be exempted under the transition provisions even though it would have required an environmental assessment under the former act and would normally be subject to the new act. Where a proponent of a project was advised under the former act that an environmental assessment was not likely required, the transition provisions in CEAA 2012 exempt it from application of the new process.

This exemption would hold, even though a trigger under the former act—that is, a federal decision about a project—might subsequently be identified. The proposed amendment would subject a designated project, exempted under current provisions, to the requirements of the act if it is determined prior to January 1, 2014, that the project requires a federal decision that would have resulted in an environmental assessment under the former act. This amendment would ensure equitable treatment of similar designated projects under two different legislative schemes.

Thank you.

[The Chair, Conservative, Mark Warawa]

I call the meeting to order.

This being the 52nd meeting of the Standing Committee on Environment and Sustainable Development, our task this morning is to review certain clauses of Bill C-45.

I want to report to the committee before we hear from the witnesses, because the hope was that we would have some additional witnesses. We called every witness recommended both by the opposition members and by the government members and, unfortunately, because of the short notice, we were not able to get any additional witnesses.

We reached a time—yesterday at noon, approximately—when we made the judgment call that it was too late to try to continue searching for some witnesses. My apologies: we did try, but for every name that we got, the people weren't available or they did not want to come as witnesses.

We do have the witnesses from the department here for an hour, and then the plan is to break. With more witnesses, we were going to hear from them for an hour and a half; I've made a judgment call of just an hour with the witnesses, and then we'll go in camera and discuss Bill C-45.

Do I have your okay on that?

[Daniel Champagne, Director General, Infrastructure and Environmental Operations, Canada Border Services Agency]

Thank you, Mr. Chair, and members.

As the committee is aware, the Canada Border Services Agency is responsible for integrated border management that supports national security and public safety priorities and facilitates the free flow of legitimate persons and goods, while meeting all requirements under program legislation.

This responsibility extends to the enforcement of immigration and refugee policy, border inspection of food, plants and animals, and providing intelligence and enforcement support to uphold our safety and security obligations under the law.

In all, the CBSA is responsible for the administration of some 90 acts and regulations that govern the admissibility of people and goods into and out of Canada.

Today we are pleased to be here to discuss the proposed changes to the Customs Act contained in Bill C-45. There are three amendments in total.

First, with regard to pre-departure traveller information, the first proposed change will amend subsection 107.1(1) of the Customs Act to allow the Minister of Public Safety to require the reporting of prescribed information about persons who are expected to be on board a conveyance. This amendment would allow the CBSA officials to review traveller information earlier in the travel process—that is, prior to departure of a conveyance to Canada. This amendment is consistent with the agency's priorities to push the border out and address threats at their earliest opportunity.

With all new or modified programs that collect, use, retain, or disclose personal information, the CBSA will assess the risk to individual privacy rights and address those risks through appropriate strategies. Dealing with large volumes of sensitive personal information on a daily basis, the agency respects privacy rights and fosters a culture of privacy throughout the organization. This is evidenced in CBSA's reputation as a global leader in its treatment of advance passenger information and also passenger name record data.

This amendment will protect Canadians by increasing the integrity of the border, and is also expected to result in cost savings in the long term by reducing costs related to the arrival of inadmissible persons in Canada.

With regard to advance data requirements for the pre-screening of cargo, the second proposed change amends section 12.1 of the Customs Act. It is aimed at improving the risk assessment of goods before they arrive in Canada. Section 12.1 amendments will strengthen and streamline the pre-arrival, including preload, advance information requirements for all commercial goods destined for import to Canada, including in-transit goods. They will also improve enforcement measures based on advance information provided, including new enforcement measures for failing to comply with a “do not load” notification issued by the CBSA.

These amendments would allow the Agency to better mitigate health, safety and security threats prior to the goods arriving in Canada.

The final amendment relates to clarifying port authority obligations with respect to the maintenance of customs facilities.

Increasingly, owners and operators of international toll bridges and tunnels, airports, marine ports, and railways are questioning and legally challenging the scope of their obligations under section 6 of the act to provide, equip, and maintain adequate port of entry facilities free of charge to Her Majesty.

The amendments clarify what the CBSA has always required owners and operators to provide and maintain and what owners and operators have always provided and maintained free of charge to Her Majesty since the inception of section 6, enacted in 1986.

The changes do not impose additional obligations or requirements on owners and operators, who collect tolls and fees from travellers using their facilities. This clarification amendment regarding the scope of the term “maintain” is needed to ensure continued access by the CBSA to adequate port of entry facilities free of charge.

The three amendments pertaining to the CBSA before you support the agency's efforts to ensure that travellers and goods will not pose a threat to the safety and security of this country.

Thank you for the opportunity to speak to you today. My colleagues and I are pleased to answer any questions you may have.

[The Chair, Conservative, Kevin Sorenson]

Good afternoon, everyone.

This is meeting number 58 of the Standing Committee on Public Safety and National Security. It is Wednesday, November 7, 2012. Today we are dedicating a meeting to the subject matter of clauses 264 to 268, affecting the 2001 Customs Act.

These clauses, as you know, are part of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures. These are the clauses of Bill C-45 that are under the purview of our committee.

Our witnesses today will help us examine these clauses. They are from the Canada Border Services Agency.

We welcome to our committee, first of all, Mr. Daniel Champagne, director general of infrastructure and environmental operations; Ms. Kristine Stolarik, the director general of the pre-border programs directorate; Ms. Anita Henderson, counsel with the legal services branch; and also Ms. Sharon McKeen, manager of the travellers unit, advance information and programs.

Our committee thanks these witnesses for testifying today. Once again, we have Canadian public services responding to our call on short notice to help us as the committee go through these clauses that are part of the implementation act. In our final 30 minutes, we will have a discussion of possible recommendations and amendments based on what we have heard today.

Mr. Champagne will be bringing forward the testimony, and we look forward to that.

I see that you have a printed text and it is not that long. We are going to try to keep it as short as possible so that we have ample time for questions and then ample time to draw up our recommendations.

Welcome.

[Blake Richards, Conservative, Wild Rose, AB]

Thanks, Mr. Chair.

Thanks to all of you. I know that in my previous time on the agriculture committee in the last Parliament I had a chance to meet with you and talk with all of you, but it's been a little while. It's nice to see you all again, and I appreciate you being here tonight—well into the evening—to share your thoughts and views with us. They're important to us, and we appreciate you being here to share them.

I have a couple of questions, and I'll start with you, Mr. White.

As I said to the earlier panel, I think many farmers—and I certainly agree—would see this as another step in the modernization of our grain system, especially in western Canada. Obviously, last year, with the changes to the Canadian Wheat Board introducing voluntary marketing and giving farmers that choice, that marketing freedom in terms of where they'll market their grain, whether it be through the Wheat Board or otherwise, that was a very big first step. I know that for farmers in my area that was something they were seeking for many years, and they are very excited about the opportunities they now have as a result of that.

I think this is the next step in that modernization process. I know, Mr. White, you've indicated that you'd like to see further changes, further streamlining of the Canadian Grain Commission, and that's appreciated. I think there will probably be opportunities to hear more about that at some point as well.

Obviously, we're here tonight to talk about the changes that are being made in Bill C-45. I noted that in a recent press release you called it a good first step in updating an organization that has not seen any significant changes in over 25 years, so you obviously tend to agree with me that this is a good step.

I would like to hear a little bit more from you in terms of what you see as long-term benefits for the industry in these changes that are being made here. Could you elaborate a bit on your reasons for saying it's a good step, and what you see as some of the long-term benefits for the industry as a result?

[Richard White, General Manager, Canadian Canola Growers Association]

Thank you, Mr. Chairman, and good evening to members of the committee. Thank you for inviting me here today to speak about Bill C-45 and changes pertaining to the Canada Grain Act and the Canadian Grain Commission.

I'm here today in my capacity as general manager of the Canadian Canola Growers Association, but I'm also a farmer actively involved in our family grain farm in southeastern Saskatchewan.

Canola is grown by well over 43,000 farmers from coast to coast. The canola industry is an incredibly important economic and agronomic contributor to the farms of Canada and to the broader Canadian economy, creating jobs, growing exports, and improving the health of Canadians.

Canola is a Canadian success story, going from minimal acres in the early 1980s to the largest cash crop in Canada today. But to continue this path of innovation, canola farmers need a reliable regulatory system that ensures our products meet the quality standards and product specifications required by our customers.

Reforms to the Canada Grain Act, and thereby the CGC, are necessary to maintain a world-class institution that is efficient, cost effective, and respected not only by our producers but by our customers around the world.

This year the government announced that the CGC would be moving to a cost-recovery model fully funded by farmers through increased user fees. As a national voice for canola growers, we strongly contend that reforms must be made to the CGC before implementation of the increased fees on August 1, 2013.

The changes introduced in Bill C-45 are a good first step, but more needs to be done. Removing the mandatory requirement for the CGC to conduct inward weighing and inspection is necessary and will help reduce the CGC's operating costs. Providing new options around security is also a positive move.

However, there are a number of areas the legislation fails to address, including governance and licensing. Changes to the CGC governance structure are imperative and should be included in the legislation that strives to modernize the CGC. Therefore, CCGA supports a modernized governance structure that maintains strong ties and accountability to both industry and farmers. In our submission to the Canadian Grain Commission, we advocated for a governance model that included vice-presidents reporting to a president, all of whom would be appointed by the Government of Canada. Additionally, our proposed model would eliminate the COO position.

Licensing is another area where change is needed. One of the provisions in the act currently gives farmers the right to ask the CGC to determine the grade and dockage of their grain delivered to a primary elevator if they disagree with the grade and dockage received from that elevator. The service is known as “subject to inspector's grade and dockage” and is not currently available at process facilities such as crush plants. With a significant portion of the canola crop now being delivered directly to crush plants, this provision should be extended to process facilities so that canola farmers are afforded the same rights, whether delivering to a processing elevator or to a primary elevator.

CCGA would also like to see flexible language included in the legislation that would allow for a third party to conduct outward weighing and inspection. While the legislation does allow for a CGC-accredited third party to conduct outward weighing, CCGA would like to see it extended to outward inspection as well.

A final important area that needs to be considered is public good versus private good. The CGC provides a large number of services that benefit the good of Canada, and these costs should not be included in the proposed increased user fees that will be paid solely by farmers. For example, the grain research laboratory, policy development, the maintenance of grain quality standards and assurance system, to name a few, should continue to be funded by the government, since we believe they are there for the public good, not simply for the benefit of farmers. It is our estimation that at least 25% of the CGC's budget should be funded from tax dollars, as these services benefit all Canadians. It is currently proposed at only 9%.

While we are pleased the government has taken a step forward with this legislation, we urge you to introduce another bill this coming spring to complete the CGC's progress toward modernization. In the end, it is farmers who will be paying for the majority of the costs of the CGC, so they should have an institution that is lean, modern, efficient, and that advocates for them and understands their business.

Thank you for your time. I look forward to answering your questions.

[Elwin Hermanson]

The current consultation, which commenced on November 1, is not to review the content of this bill, but rather to review our user fees, which will now complement the services that will be provided upon the passage of this bill.

The actual consultation will take place for about a month. We are not planning on extensive consultation. We consulted broadly after the 2010 budget, when it was clear that our funding model would change to a more sustainable model. So the extent of the consultations will be very focused on where the service changes are. We expect to hear from all of our industry stakeholders. We usually do.

There is a process under the User Fees Act that we have to follow. There's a certain time period for responses and a time for any complaints. If there are complaints, there's a period of time when those should be resolved. The proposed fees come, I think, to both Houses of Parliament for your review and approval.

In addition to this consultation, we have done an engagement with the industry on the amendments we're talking about in Bill C-45. This was a fairly extensive process where we heard from a large number of our stakeholders. You'll never get 100% support, but I would gauge that we certainly had a consensus among the industry that the amendments you're considering have general support from most stakeholders.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Very quickly, Mr. Thomas, in Bill C-45 there are provisions for transfer pricing. Do you believe the government should do more in terms of tackling tax havens and tax evasion?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you, Mr. Chair.

Mr. De Luca, a little earlier, a number of witnesses came to talk to us about the scientific research and experimental development tax credit. They said that the measures taken by the government were not beneficial for the manufacturing sector, among others, and that the sector was going to experience job losses because of the loss of investment.

We have also heard from the government side that one of the reasons behind the measures contained in Bill C-45 is to reduce red tape.

red tape reduction.

However, as someone said, this does not help to accomplish that.

Can you tell us what the impact is on the manufacturing sector? Why are the people you are representing opposed to the measures taken by the government in terms of the cuts?

[Mark Adler, Conservative, York Centre, ON]

Okay.

Now, Bill C-45 brings in some changes to the public sector pension plan system, bringing it more in line with the private sector. In advance of budget 2012, the CFIB said:

...start bringing federal public sector wages and benefits more in line with the private sector. ...federal public sector employees should increase their pension contributions from the current approximate 36% of their pension to 50% over time, which is the norm for most provincial public sector employees.

What is your reaction to the change taking place specifically in Bill C-45?

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

Thank you, Madam Chair.

I'd like to begin with Ms. Pohlmann. Under Bill C-45, the 2012 hiring credit does not factor in the 2011 hiring credit calculations. The calculation under Bill C-45 is based on employers' 2011 EI premiums before the hiring credit. As a result of that, for instance, a small company with 10 employees, earning $39,000 each in salary, would pay premiums of $9,445 in 2011. In 2012, that would go up to $9,718. Would you acknowledge that small businesses, even those that qualify for the 2012 hiring credit, would still see their EI rates go up by 7¢ per $100 contribution in 2012 compared to what they paid in 2011?

[Gregory Thomas, Federal and Ontario Director, Canadian Taxpayers Federation]

Mr. Chairman, we appreciate the invitation of the committee to appear today.

The Canadian Taxpayers Federation is Canada's largest taxpayer advocacy group, with over 70,000 supporters from coast to coast, and 22 years of history advocating for less government, lower taxes, and more accountability from our elected officials.

We welcome the reforms contained in Bill C-45 as they apply to public sector pensions. We believe that increasing the retirement age for new hires to 65 is a good first step toward making government employee pensions at the federal level more sustainable. We salute members of all parties for taking leadership by reforming their own pensions and speeding that legislation to royal assent. It was a long multi-decade slog for us, and you folks managed to get the job done in 48 hours when the chips were down. That was inspiring to watch.

With regard to pensions, if you look at C.D. Howe Institute's estimates and the public accounts, you see that unlike the Canada pension plan, the government employees' pensions are completely funded out of general revenues. There are no pension funds set aside to secure the retirements of Canada's federal government employees. We believe that Parliament needs to have a serious look at this.

The government was able to put the Canada pension plan on a sustainable basis. Through reforms to old age security, by raising the retirement age to 67, and by giving people an incentive to stay in the workforce until age 70, you're also putting old age security benefits on a more sustainable basis. We think you need to look at this for government employees.

With regard to EI, we have a lot of sympathy for the arguments made by the Canadian Labour Congress. They rightfully feel that to have $57 billion of employment insurance funds snafued by government in order to apply them to deficit reduction is a shocking and upsetting development. The seizing of these notional pension surpluses in the 1990s falls under the same banner. We think that parliamentarians, people with their feet on the ground who have to go home on the weekend and explain all of this to their constituents, need to be very wary of actuarial assumptions and projections, notional surpluses, and these deficits that arise. When you move away from having individuals save for their own retirements, innocent people are subject to the manipulations of government and the financial system, and it doesn't serve anyone.

With regard to the EI funding, we note that for every employee up to the average industrial wage, employers and employees who are fully in the system pay over $2,000 combined into the EI fund each year. Many people will never claim against the EI fund, and yet you have entire regions of the country where people are multiple claimants, claiming more than three times in the last five years. It's particularly unfair in the Ontario labour market, where it's very difficult for most people who are working to even qualify for EI. We ask why you don't set up a plan similar to the Canada pension plan, where employees and employers contribute to a rainy day fund that individual workers can access directly.

Thank you.

[Angella MacEwen, Senior Economist, Social and Economic Policy, Canadian Labour Congress]

On behalf of the 3.3 million members of the Canadian Labour Congress, we want to thank you for this opportunity to present our views regarding the 2012 budget implementation bill.

The CLC brings together workers from virtually all sectors of the Canadian economy, in all occupations and in all parts of Canada.

Bill C-45, division 22, proposes to temporarily suspend the Canada Employment Insurance Financing Board, the CEIFB. The suspension of the CEIFB makes sense, as it was constrained in setting rates by subsection 66(7) of the EI act, which limited rate increases or decreases to 0.05% of insurable earnings.

The CLC never agreed with the CEIFB as it was established, because it failed to include input from premium payers who are employees and employers.

In past submissions to the government and to parliamentary committees, the CLC called for a separate employment insurance account, governed by an EI commission or similar body, established at arm's length from the federal government. Similar to the CFIB, we are concerned with the surplus that was taken. We argued that the EI account and any surplus funds placed in a reserve fund or premium stabilization fund should be used only for EI purposes.

The fact that the EI program is paid for by employer and worker premiums has not been adequately reflected in the governance of EI finances. If we consider the $57 billion that was taken from the account without the consent of premium payers, the account would be in a surplus position right now. The government would be less concerned about cutting back EI programming, and EI would be more effectively performing one of its key roles as an automatic economic stabilizer.

When the CEIFB is reinstated, the premium payers, who are the employees and employers, should have closer input into the premium-setting process, and effective joint control with the government over the management of any reserve funds and the use of any surpluses.

As well, we want to comment on how the EI financing system now in place is not operating in an appropriately counter-cyclical way.

Even though the federal government directly covered the cost of the EI measures in Canada's economic action plan, including the cost of the premium freeze during the recession, training benefits, work sharing, and the temporary five-week extension of regular benefits, the EI operating account went into deficit because of the large increase in the cost of regular EI benefits caused by an increase in the national unemployment rate from about 6% before the recession to a high of 8.6% in 2009 and continuing high unemployment since the worst of the recession. It's been at about 7.4% for the past year.

Premiums were frozen rather than reduced during the worst of the recession, and are now rising during a very weak recovery. While premium revenue is forecast to exceed EI expenditures in 2012, it will have to continue to do that in order to pay off the deficit of $9.2 billion that was in the EI operating account at the end of 2011.

The stage is set for continuing premium increases for several years in order to eliminate the accumulated deficit. Again, this is the case notwithstanding the huge EI surplus that was accumulated before the recession.

We believe the federal government should pay into the segregated EI operating account an amount equal to deficits in the account incurred from 2009 until such time as the account is segregated, and should cover any future deficits incurred in the account until such time as the national unemployment rate falls below 6.5%.

I would also like to speak to an unexpected tax change in Bill C-45. Bill C-45 clarifies the taxation of RCAs, closing an unintended loophole. At the same time, Bill C-45 extends pension-splitting to RCAs.

Budget 2012 states:

Under the Income Tax Act, a retirement compensation arrangement (RCA) is a type of employer-sponsored, funded retirement savings arrangement. RCAs are normally used to fund the portion of a higher-income employee's pension benefit that exceeds the maximum pension benefit permitted under the Registered Pension Plan (RPP) contribution limits.

This is effectively a tax break for wealthy seniors that will have very little benefit for most Canadians. Pension income splitting provisions do not benefit unattached seniors, who are 30% of all Canadians over the age of 65 and who are those most vulnerable to poverty, and there is no benefit to senior couples whose income is so low that they already pay no income tax.

The amount of tax savings from pension income splitting depends on the income level, so the small proportion of affluent seniors receive the largest reductions, with the majority of middle-income seniors seeing only a modest reduction, if any. This is especially true of allowing pension splitting on RCAs, into which many seniors will not have had the resources to contribute.

As well, different types of pension splitting have different impacts. Allowing spousal RSPs encourages the higher earning spouse to transfer the funds into the control of the lower earning spouse. Allowing the splitting of pension income for tax purposes reduces the couple's tax burden in the current year, but does not require funds to be shared with the lower earning spouse. An example of where this might matter is in the case of subsequent divorce, or the death of the higher earning spouse. Where pension splitting was encouraged via spousal RSPs, the lower earning spouse is far better off than in other forms of pension-splitting.

A thorough gender-based analysis of the budget and budget provisions, such as GBA+, as outlined on the Status of Women website, would illuminate the differential gender impact of such apparently gender neutral policy decisions.