Bill C-60 (Historical)

Economic Action Plan 2013 Act, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures

Part 1 implements certain income tax measures proposed in the March 21, 2013 budget. Most notably, it
(a) allows certain adoption-related expenses incurred before a child’s adoption file is opened to be eligible for the Adoption Expense Tax Credit;
(b) introduces an additional credit for first-time claimants of the Charitable Donations Tax Credit;
(c) makes expenses for the use of safety deposit boxes non-deductible;
(d) adjusts the Dividend Tax Credit and gross-up factor applicable in respect of dividends other than eligible dividends;
(e) allows collection action for 50% of taxes, interest and penalties in dispute in respect of a tax shelter that involves a charitable donation;
(f) extends, for one year, the Mineral Exploration Tax Credit for flow-through share investors;
(g) extends, for two years, the temporary accelerated capital cost allowance for eligible manufacturing and processing machinery and equipment;
(h) clarifies that the income tax reserve for future services is not available in respect of reclamation obligations;
(i) phases out the additional deduction available to credit unions over five years;
(j) amends rules regarding the judicial authorization process for imposing a requirement on a third party to provide information or documents related to an unnamed person or persons; and
(k) repeals the rules relating to international banking centres.
Part 1 also implements other income tax measures and tax-related measures. Most notably, it
(a) amends rules relating to caseload management of the Tax Court of Canada;
(b) streamlines the process for approving tax relief for Canadian Forces members and police officers;
(c) addresses a technical issue in relation to the temporary measure that allows certain family members to open a Registered Disability Savings Plan for an adult individual who might not be able to enter into a contract; and
(d) simplifies the determination of the Canadian-source income of non-resident pilots employed by Canadian airlines.
Part 2 implements certain goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 21, 2013 budget by
(a) reducing the compliance burden for employers under the GST/HST pension plan rules;
(b) providing the Minister of National Revenue the authority to withhold GST/HST refunds claimed by a business where the business has failed to provide certain GST/HST registration information;
(c) expanding the GST/HST exemption for publicly funded homemaker services to include personal care services provided to individuals who require such assistance at home;
(d) clarifying that reports, examinations and other services that are supplied for a non-health-care-related purpose do not qualify for the GST/HST exemption for basic health care services; and
(e) ending the current GST/HST point-of-sale relief for the Governor General.
Part 2 also amends the Excise Tax Act and Excise Act, 2001 to modify the rules regarding the judicial authorization process for imposing a requirement on a third party to provide information or documents related to an unnamed person or persons.
In addition, Part 2 amends the Excise Act, 2001 to ensure that the excise duty rate applicable to manufactured tobacco other than cigarettes and tobacco sticks is consistent with that applicable to other tobacco products.
Part 3 implements various measures, including by enacting and amending several Acts.
Division 1 of Part 3 amends the Customs Tariff to extend for ten years, until December 31, 2024, provisions relating to Canada’s preferential tariff treatments for developing and least-developed countries. Also, Division 1 reduces the rate of duty under tariff treatments in respect of a number of items relating to baby clothing and certain sports and athletic equipment imported into Canada on or after April 1, 2013.
Division 2 of Part 3 amends the Trust and Loan Companies Act, the Bank Act, the Insurance Companies Act and the Cooperative Credit Associations Act to remove some residency requirements to provide flexibility for financial institutions to efficiently structure the committees of their boards of directors.
Division 3 of Part 3 amends the Federal-Provincial Fiscal Arrangements Act to renew the equalization and territorial formula financing programs until March 31, 2019 and to implement total transfer protection for the 2013-2014 fiscal year. That Act is also amended to clarify the time of calculation of the growth rate of the Canada Health Transfer for each fiscal year beginning after March 31, 2017.
Division 4 of Part 3 authorizes payments to be made out of the Consolidated Revenue Fund to certain entities or for certain purposes.
Division 5 of Part 3 amends the Canadian Securities Regulation Regime Transition Office Act to remove the statutory dissolution date of the Canadian Securities Regulation Regime Transition Office and to provide authority for the Governor in Council, on the Minister of Finance’s recommendation, to set another date for the dissolution of that Office.
Division 6 of Part 3 amends the Investment Canada Act to clarify how proposed investments in Canada by foreign state-owned enterprises and WTO investors will be assessed and to allow for the extension, when necessary, of timelines associated with national security reviews.
Division 7 of Part 3 amends the Canada Pension Plan to ensure that the Canada Revenue Agency can accurately identify, calculate and refund overpayments made to the Canada Pension Plan and the Quebec Pension Plan in a particular year by contributors who live outside Quebec.
Division 8 of Part 3 amends the Pension Act and the War Veterans Allowance Act to ensure that veterans’ disability benefits are no longer deducted when calculating war veterans allowance.
Division 9 of Part 3 amends the Immigration and Refugee Protection Act to authorize the revocation of temporary foreign worker permits, the revocation and suspension of opinions provided by the Department of Human Resources and Skills Development with respect to an application for a work permit and the refusal to process requests for such opinions. It authorizes fees to be paid for rights and privileges conferred by means of a work permit and exempts, from the application of the User Fees Act, those fees as well as fees for the provision of services in relation to the processing of applications for a temporary resident visa, work permit, study permit or extension of an authorization to remain in Canada as a temporary resident or in relation to requests for an opinion with respect to an application for a work permit.
It also provides that decisions made by the Refugee Protection Division under the Immigration and Refugee Protection Act in respect of claims for refugee protection that were referred to that Division during a specified period are not subject to appeal to the Refugee Appeal Division if they take effect after a certain date.
Division 10 of Part 3 amends the Citizenship Act to expand the Governor in Council’s authority to make regulations respecting fees for services provided in the administration of that Act and cases in which those fees may be waived. It also exempts, from the application of the User Fees Act, fees for services provided in the administration of the Citizenship Act.
Division 11 of Part 3 amends the Nuclear Safety and Control Act to authorize the Canadian Nuclear Safety Commission to spend for its purposes the revenue it receives from the fees it charges for licences.
Division 12 of Part 3 enacts the Department of Foreign Affairs, Trade and Development Act, sets out the powers, duties and functions of the Minister of Foreign Affairs, the Minister for International Trade and the Minister for International Development and provides for the amalgamation of the Department of Foreign Affairs and International Trade and the Canadian International Development Agency.
Division 13 of Part 3 authorizes the taking of measures with respect to the reorganization and divestiture of all or any part of Ridley Terminals Inc.
Division 14 of Part 3 amends the National Capital Act and the Department of Canadian Heritage Act to transfer certain powers, duties and functions to the Minister of Canadian Heritage from the National Capital Commission. It also makes consequential amendments to the National Holocaust Monument Act to change the Minister responsible for the construction of the monument to the Minister of Canadian Heritage from the Minister responsible for the National Capital Act.
Division 15 of Part 3 amends the Salaries Act to add ministerial positions for regional development responsibilities for northern Canada, and northern and southern Ontario. It also amends the Salaries Act to replace a reference to the Solicitor General of Canada with a reference to the Minister of Public Safety and Emergency Preparedness. It also makes an amendment to the Parliament of Canada Act to provide that the maximum number of Parliamentary Secretaries who may be appointed is equal to the number of ministers for whom salaries are provided in the Salaries Act.
Division 16 of Part 3 amends the Department of Public Works and Government Services Act to remove the requirement for the Minister of Public Works and Government Services to obtain a request from a government, body or person in Canada or elsewhere in order for the Minister to do certain things for or on their behalf. It also amends that Act to specify that the Governor in Council’s approval relating to those things may be given on a general or a specific basis.
Division 17 of Part 3 amends the Financial Administration Act to give the Governor in Council the authority to direct a Crown corporation to have its negotiating mandate approved by the Treasury Board for the purpose of the Crown corporation entering into a collective agreement with a bargaining agent. It also gives the Treasury Board the authority to require that an employee under the jurisdiction of the Secretary of the Treasury Board observe the collective bargaining between the Crown corporation and the bargaining agent. It requires that a Crown corporation that is directed to have its negotiating mandate approved obtain the Treasury Board’s approval before entering into a collective agreement. It also gives the Governor in Council the authority to direct a Crown corporation to obtain the Treasury Board’s approval before the Crown corporation fixes the terms and conditions of employment of certain of its non-unionized employees. Finally, it makes consequential amendments to other Acts.
Division 18 of Part 3 amends the Keeping Canada’s Economy and Jobs Growing Act to provide for increases to the sums that may be paid out of the Consolidated Revenue Fund for municipal, regional and First Nations infrastructure through the Gas Tax Fund. It also provides that the sums may be paid on the requisition of the Minister of Indian Affairs and Northern Development.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Thank you very much. I will go right to the question.

Mr. Stanford, I was very interested in your comments. You mentioned the resource sector and how it seems to be highly dependent on foreign direct investment. Could you elaborate on the provision in Bill C-60 regarding the Investment Canada Act? Will it change that course or not? How will it affect the resource sector regarding foreign investment?

[Ailish Campbell]

I think my colleague Mr. Facey made an important point, which is that every time you change a piece of framework legislation it attracts international attention. It's one thing for me to sit here today in 2013 and say that my advice would be, in an ideal world, to change the Investment Canada Act rarely and with very careful consideration. In an ideal world, we may not have changed it in 2009, 2012, and 2013, but rather have done it a single time.

That being said, I would argue that over the last five years we've experienced incredibly unique global economic circumstances. The financial crisis is one that we hadn't experienced in almost 100 years. There are new forms of global capitalism that are looking to gain majority stakes in, and indeed own, Canadian businesses, which is again something new.

All this is to say that I think the government is reacting and looking forward. I think we'll get the best answer to that question when we look at the foreign investment stocks in Canada, and the ability of our firms, both large, such as our members, and small, such as junior mining plays, that wish to attract capital to Canada.

I think it's too early to say if it's better. I think we can all agree that the government's intention is certainly to make this a better system. I do trust in that intention, but the proof will be in how the act and the SOE guidelines are actually executed. In that regard, I would again underscore my point that, given the broad definition of SOEs before you today in Bill C-60, the government also consider advanced rulings so that entities that don't consider themselves to be SOEs but wonder if they'll be treated as SOEs under this legislation can come in and get some kind of guidance about that. I think that is critical in order to create investor confidence.

The proof is in the pudding. The proof is in the numbers. The stock of investment outflows and inflows is very healthy, and I hope it will continue to be, again with the proper execution of the Investment Canada Act.

[Jim Stanford, Economist, National Automobile, Aerospace, Transportation and General Workers Union of Canada]

Thank you, Chair and members of the committee.

I work as an economist with the Canadian Auto Workers union, which also represents about 200,000 members in about 16 different sectors of our economy, including manufacturing, resources, transportation, and services.

Our union welcomes foreign investment to Canada if it enhances Canada's capabilities, adds to our productive capacity, creates jobs, and accumulates real capital assets or technical knowledge. Many of our most important industries, such as the auto sector, are largely or entirely foreign-owned. They have added immensely to our economic development and prosperity.

But not all of the effects of foreign investment are positive. There are inherent risks and costs with any foreign takeover, including the loss of decision-making control to non-residents, the long-run payout of interests, profit, and dividends to foreign owners, and the risk that foreign investment will qualitatively shape Canada's economy in ways that we do not want.

One trend in this regard that is especially concerning to us has been the role of incoming foreign investment in enhancing Canada's dependence on the extraction and export of raw minerals and resources. Foreign direct investment into the resource sector has been an important mediating factor in the exchange rate over appreciation that has damaged many other Canadian export industries over the last decade.

As an economist, I question the general statement that Canada inherently needs more foreign capital for the future development of our economy. Even in the resource sector, Canada is not short of capital in any real economic sense. In fact, we export capital. Canadian companies invest more FDI abroad than foreign companies invest here. Canadian companies have access to enormous liquidity to finance their real investments here, both through their internal assets, which include over $600 billion in cash and short-term financial assets—the so-called dead money today—and through the operation of a banking system that is one of the strongest in the world. The debt-equity ratio of Canadian non-financial businesses is lower than it has been in decades.

In the resource sector, in particular, there's no indication that our capacities are also constrained by a lack of know-how—that is, by a shortage of proprietary intellectual capital or technology. To the contrary, recent takeovers of Canadian resource firms, including the CNOOC-Nexen transaction, were in fact motivated by foreign desire to purchase our know-how.

In some sectors, such as manufacturing or some specialized services, a case could be made that incoming FDI provides proprietary technology, engineering and design advantages, global marketing opportunities, or other benefits. But it's hard to see those tangible benefits in the case of foreign takeovers of resource-producing assets. Those takeovers seem to constitute a straight transfer of control over a non-renewable asset. The investors are not building something in Canada; they are buying something that they hope will generate large rents in the future. In my judgment, foreign resource takeovers that add no value to our actual productive capacity should normally be refused on net benefit grounds.

We described our views on the costs and benefits of FDI in more detail in our submission to the 2008 competition policy review panel that Mr. Facey mentioned earlier. I will forward a copy of our full submission to the committee for your deliberations.

Regarding the Investment Canada Act, the principle of a net benefit test is a valid one, in our view. It recognizes that there are costs as well as benefits to any foreign direct investment. Those two must be evaluated and net benefits should be maximized as a goal of policy. But the operation of that test within the current Investment Canada Act is vague, opaque, largely unenforceable, and the whole process is secretive, arbitrary, and hence politicized. In our view, the Investment Canada system should be fundamentally overhauled.

Since 1985, under the ICA, there have been over 15,000 acquisitions of Canadian companies by foreign firms. Of those, barely one in ten were even reviewed by Investment Canada, and of those, all but two were approved. The two that were rejected, MDA and Potash, had become political hot potatoes for the governments of the day. While I'm glad that both of those takeovers were turned down, our system for regulating foreign investment should not depend on public opinion at any point in time.

The president of the CAW, Ken Lewenza, wrote to Industry Minister Paradis last year after the closure of the locomotive plant in London, Ontario, by the Caterpillar company, which had purchased that plant from former owners only months earlier. That terrible chain of events revealed deep flaws in the Investment Canada system. Mr. Lewenza's letter outlined five key changes to the ICA that our union proposed, and I will also forward that letter to your committee for reference. To list the five changes, they are: one, improved transparency; two, stakeholder input; three, tightening up loopholes in the act, including a lower threshold for review, and the review of indirect acquisitions; four, a clearer system for defining and measuring Canadian costs and benefits; and five, the ability to impose and enforce commitments and conditions.

In contrast, the changes to the Investment Canada system that are proposed in this legislation before you do not satisfactorily address any of those issues. Bill C-60 establishes a differential process for foreign state-owned corporations, including a lower threshold for their review and broad and arbitrary provisions regarding how foreign state-owned enterprises are identified and how effective control is determined.

This approach is rooted in an assumption, unjustified in my view, that privately held foreign companies will act in ways that are fundamentally more compatible with the Canadian public interest. I do not think Canadians should trust a foreign privately held corporation to act in line with our interests any more than a foreign state-owned company. The threshold should not be raised for any of the acquiring companies.

The arbitrary focus on state-owned enterprises contained in this legislation misses the bigger problems with the existing Investment Canada system. These provisions will clearly give the minister more flexibility and authority to reject future takeovers from SOEs, but in ways that are even more opaque and arbitrary than the current system.

Finally, in concluding, given the important and lasting effect of these measures and the complexity of their effects, as we've already heard in this hearing today, in my view it may not be appropriate to consider these measures within the context of the broader budget implementation bill. That is how the last set of changes to the Investment Canada Act were considered and implemented in 2009, and we already know that those changes were not adequate to the task. I believe we would be better served by a more thorough and careful consideration of the costs and benefits of foreign direct investment through a focused, stand-alone legislative initiative.

With that, I thank you, and I look forward to our discussion.

Thank you.

[Ailish Campbell, Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives]

Thank you.

Mr. Chair, committee members, thank you for the invitation to appear before the committee concerning amendments to the Investment Canada Act in Bill C-60.

Before I begin my comments, let me briefly introduce my organization, the Canadian Council of Chief Executives.

The Canadian Council of Chief Executives is a not-for-profit, non-partisan organization composed of 150 CEOs of Canada's leading businesses. We engage in an active program of public policy research, consultation and advocacy. The CCCE is a source of thoughtful, informed comment from a business point of view on issues of national importance to the economic and social fabric of Canada.

The Canadian Council of Chief Executives represents 150 chief executives and leading entrepreneurs in all sectors and regions of the country. Our members lead companies that collectively administer $4.5 trillion in assets, employ more than a million Canadians, and are responsible for the majority of Canada's exports.

The topic before your committee today is an important and highly complex one. Changes to the Investment Canada Act and the federal government's policies cannot be viewed in isolation but as part of a history of experience with the review of foreign investment in Canada. The changes that form the subject of your deliberations were announced in December 2012, when the government approved two significant acquisitions of Canadian firms by foreign state-owned enterprises under the existing ICA, the Investment Canada Act.

It is our view that the decision to approve the acquisitions of Nexen and Progress Energy Resources was the right one. Canada's population is small relative to those of other major advanced economies, and we have a tremendous need for capital to develop our industrial base and to achieve our potential as a leading exporter of energy and advanced energy technologies. At the same time, companies looking to invest in Canada must play by our rules, respect our values, and adhere to Canadian laws as well as our regulations and environmental and labour standards. Canada wants and needs foreign investment, but not all and not any.

Of significant importance, the government did not change the rules during the reviews of these two transactions, recognizing that to do so would have significantly lowered investor confidence. Canada has one of the strongest traditions of the rule of law in the world. We are clear in our purpose and our willingness to act as circumstances demand. Such fortitude requires a constant assessment of our rules, and on occasion their amendment.

In examining the changes to the ICA before us today as part of Bill C-60, there are three comments I wish to table.

The first is that the Canadian Council of Chief Executives supports the government in its efforts to promote foreign direct investment in Canada. The CCCE also supports the government in its efforts to articulate its intent to assess the commercial interests of investors making significant acquisitions in Canada, and this of course includes state-owned enterprises. Foreign direct investment in Canada is critical. Our history, from the fur trade to resource development, is the story of effectively harnessing foreign capital to improve our standard of living. Foreign investment brings a wealth of management expertise, innovation, and new business opportunities, not only capital. Canada needs foreign investment to realize our potential.

The CCCE fully supports actions to ensure Canada's openness to investment and to provide comfort to Canadians that the government is reviewing and monitoring transactions to ensure they are undertaken on a commercial basis, they demonstrate good corporate governance, and they adhere to Canadian law. The guidelines for SOEs introduced in December recognize the essential role of private enterprise and free market principles in driving economic growth and prosperity. They will, in our view, safeguard the national interest while ensuring that Canadians continue to reap the benefits of a welcoming approach to foreign investment.

Canada is, of course, not alone in its efforts to understand and assess the impact of investments by state-owned enterprises. Our experience must be shared and developed alongside other advanced market economies to make sure our regime is internationally competitive, and indeed, why not the best in the world? The Minister of Industry and his or her officials must continue to implement the act in a way that does not impede the overall flow of investment, which provides us with our high standard of living.

The Canadian Council of Chief Executives also notes that the legislative amendments will provide some flexibility for the government to extend time periods under the national security review, also under the ICA. We support these insofar as a balance is struck between clear timelines and procedures for commercial transactions and the need for sufficient opportunity to ensure a thorough security review.

We call on the government to ensure an effective and constant dialogue between ministers and officials responsible for economic and security aspects of any possible future national security review.

The second key point is that the Canadian Council of Chief Executives supports the legislative amendments insofar as the law will continue to require that the government consider each investment on its own singular merits. As experience with the legislation and SOE guidelines evolve, we would encourage the government to consider advance rulings on whether a specific entity would be treated as an SOE under the act so as to provide clarity to investors.

There is no one-size-fits-all policy for state-owned enterprises. They are highly diverse in structure, public reporting, their behaviour, and their national country of origin. The diversity and complexity of business operations indicates that each specific investment must be reviewed on its own merits.

Not all state-owned enterprises are created equal. We know that state-owned enterprises can be responsible corporate citizens held to the same standards as public or privately owned enterprises. We also know that state-owned enterprises can engage in behaviour that is motivated by non-commercial interests. Further, not all targets of acquisition will be of equal commercial significance.

These amendments proposed will allow the government to continue to assess each transaction on the basis of its unique and specific characteristics.

We encourage the application of rules here in Canada that we would be pleased to see pertain to Canadian firms and sovereign wealth funds when they act abroad. As a major investor, as well as an investee, we want to project Canada's belief in sensible, thoughtful, and predictable standards, both in principle and in execution.

Finally, the Canadian Council of Chief Executives and the Canadian business community remain actively involved in the evolving nature of investment inflows and outflows. We welcome an ongoing dialogue with provincial and federal governments, regulators, and the public on the implementation of investment and business framework policies.

Our markets and our businesses evolve and so must our rules. We must also strive to encourage Canadian firms to get to the size and scale of the state-owned enterprises we are discussing so that Canadian firms can take leadership positions in developing our resources and invest globally.

The Canadian Council of Chief Executives is pleased to have had an almost 40-year history of engagement on these issues. Both our organization and our member firms and CEOs remain ready to contribute their business experiences to the development of policies that develop and advance Canada's economy in a global context.

Thank you.

Government Expenditures

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

Mr. Speaker, with $3 billion unaccounted for and even the Auditor General unable to find it, is that the answer?

Meanwhile, for the third time the Conservatives are forcing a budget bill through Parliament in their sham process. Some committees only have one or two meetings on very complex issues in Bill C-60 that deserve more attention. We had a witness just this morning at the finance committee who asked why he was there and not before HRSDC. Welcome to Conservative Ottawa.

Why do the Conservatives insist on evading parliamentary scrutiny and what do they have against fiscal accountability?

[Murray Rankin, NDP, Victoria, BC]

Thank you very much.

This is a question for Mr. Sauvageau. You termed the changes that would be implemented by Bill C-60 as unacceptable, and then you spoke in another answer to a question about how this would undermine the perception of independence of Radio-Canada and CBC in the eyes of the public.

I would like you to speak a bit more about that, specifically to provide a little clarity about what these changes would do. With regard to the fact that the Treasury Board could now change the bargaining mandate of Radio-Canada, how do you think that would undermine the perception of independence we've enjoyed to date?

[Murray Rankin, NDP, Victoria, BC]

Thank you, Mr. Chair.

Thank you, witnesses, for being here.

I guess I will focus my comments on Professor Smith and Mr. Bolduc, if I may, initially.

I think this is quite extraordinary. We have a very seasoned management representative and a very seasoned trade union representative united—which happens very rarely in my world—in saying that this particular move is regressive. You both expressed great concerns with Bill C-60.

I mean, we're talking about 48 crown corporations employing 88,000 Canadian workers, and you're both saying that there are problems. In fact, Professor Smith, you started by talking about the possibility of this initiative being contrary to the Canada Labour Code.

Two other legal issues also arose. Mr. Bolduc reminded us of the fact that the Canadian Charter of Rights and Freedoms guarantees free association and has been held to include collective bargaining. So we have a legal challenge, potentially, under the labour code. We have a constitutional challenge, potentially. The Friends of Canadian Broadcasting, who were here earlier with a very respected media lawyer, Brian MacLeod Rogers, indicated that there was an inherent conflict, as he called it, between the Broadcasting Act and Bill C-60, which will likely lead to legal challenges.

So I'd ask the two of you if you have any thoughts on how these legal challenges may play out or any predictions as to how this might proceed.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Sauvageau, I'd like to ask you a question about something the finance minister, Jim Flaherty, said before this committee yesterday. He was asked about a scenario in which a journalist whose reports the government is not fond of suffers consequences such as cuts to their working hours. That example may be a bit extreme. The finance minister told us this wasn't a dictatorship and there was therefore no need to worry about such things.

Without necessarily using the term dictatorship, do you think these provisions in Bill C-60 could have what is known as a chilling effect on journalists who cover government activities, for instance? Could the government curb their coverage by telling them to back off?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you all for coming here this morning.

I want to direct my question to Mr. Smith. Actually I'm sure you're aware of this, the Quebec provincial government has maintained a law since 1985 entitled An Act respecting the process of negotiation of the collective agreements in the public and parapublic sectors. This law requires all provincial crown corporations to seek ministerial approval.

Can you tell me what the difference is between that and Bill C-60, which you called unprecedented in a CBC report?

[Paul Chapin, As an Individual]

Thank you very much, Mr. Chair and honourable members.

It's an honour to be here before you today. My background is 30 years or so in the Department of Foreign Affairs, largely in the international security field, but I've also spent time in other government departments. I was a consultant for quite a few years. I was vice-president of the Pearson Peacekeeping Centre. Recently I've been associated with the Conference of Defence Associations Institute. So I hope I bring a broad perspective, both from the public and the private sector, to what I think is a very interesting issue.

My reading of the situation allows me to draw five conclusions. Let me go through them very briefly, and then I'll elaborate.

The first conclusion I draw is that the government intends henceforth that the priority for Canadian aid policy be international development rather than poverty alleviation. International development is a larger concept and it incorporates poverty alleviation, but I think the adjustment is consequential.

Second, we're talking about a construct here that is one department with three business lines, not three departments under a common roof.

Third, if it's to work, they need a common script of some kind. The Government of Canada needs to articulate an international affairs strategy that explains the larger context in which these three business lines are to operate individually and collectively.

Fourth, I know this has been argued, but there's no reason to believe we're talking about a hostile takeover of CIDA by Foreign Affairs. I think there's a great deal for everybody in this, and I don't think that taking an unnecessarily negative view of it is particularly constructive.

Finally, in the final analysis, and this comes from my consulting experience, people are going to make this work. Structure and reorganization are not going to cut it by itself.

Let me go over those five points very briefly. The transition arrangements outlined in Bill C-60 are pretty straightforward, and there's no reason for me to outline those to you today.

What I see, though, in the language is an important refocusing of the aid effort, or at least the $4 billion that has traditionally been CIDA's budget, being cast into a broader international development framework, rather than the more traditional poverty alleviation/poverty reduction vocation that CIDA has aspired to. If you read the CIDA mission statement, if you look at the ODA Accountability Act, you'll see a very strong bias toward poverty alleviation. In this draft bill I see a raising of the issue beyond poverty alleviation to put the focus on a broader international development agenda.

The second point is that what's proposed fundamentally is a repositioning of an important federal asset. CIDA and its highly efficient staff and its very large budget are to be put more at the service of a broader federal international strategy to pursue the foreign relations of Canadians in a broader context.

Let me explain why I think some of the suggestions that I have read about the previous testimony might be just a little off base. As I read the draft legislation, the duties of the Minister of Foreign Affairs have expanded from what they were under the previous Department of Foreign Affairs and International Trade Act. In those previous iterations, the minister's responsibility was to control and supervise CIDA. He or she is now responsible for fostering international development, poverty reduction in developing countries, and humanitarian assistance.

The functions of the minister have gone from supervision and control of an outside entity or an agency to being directly involved in policy and programming. I think these same duties that are now assigned to the Minister of Foreign Affairs are also assigned to the new Minister for International Development, not International Cooperation.

The plain language of the text also indicates that the Minister for International Development and the Minister for International Trade are to assist the Minister of Foreign Affairs and to operate in concurrence with the Minister of Foreign Affairs. So there's no question in my mind of three ministers with equal status. That's reinforced by looking at the duties assigned to the deputies—the same hierarchy emerges from that discussion. So the net effect is one department with one minister and one deputy minister, assisted by other ministers and other deputy ministers.

The third point is, if this is to work, that the government needs to articulate, at least in broad terms, what it's hoping to achieve, not necessarily through the restructuring, but in its international agenda. That articulation has yet to appear in any form other than periodic presentations the Prime Minister might make in a speech to an international gathering.

I don't think this articulation should be a one-time thing. On arriving in office, democratically elected governments are entitled, indeed expected, to lay out their vision for the future. This vision may well differ, in degree or in kind, from that of the predecessor. I think in a democracy that is a good thing. The genius of the democratic process is that the people get to change their mind and change the direction of their country as they wish.

So I'm not advocating one international policy statement forever. I'm advocating the commencement of a practice where new governments lay out their policies. They don't have to do a big policy review every time, but they should at least lay out what they're planning to do.

Why do I not think this is a hostile takeover? First, I don't think CIDA has ever belonged to anybody but the government and the people of Canada. It doesn't belong to the people who work there. Second, I think CIDA has a great deal to gain from this merger. Its budget has grown, but I'm not sure its standing in this country has grown very much over the years, even in Parliament. I think one reason for this has been its tendency to take a view that is rather detached from other things that are going on.

As our colleague Scott Gilmore reported in, I think, Maclean's magazine, he once had a discussion with a CIDA staffer who made the comment: “It may be a government of Canada priority, but it is not a CIDA priority.” It's that kind of mindset that has imbued a lot of CIDA thinking about its place in the larger system.

I think as it moves into the new structure, CIDA rejoins the mainstream. That means it can play in a bigger game and aspire to having a dramatically greater impact in the field that is its business line. I think also the government as a whole wins. We've talked a great deal about 3-D and whole-of-government operations. This proposal helps to knock down the bureaucratic silos that have prevented those aspirations from being realized.

Let me make one point about CIDA's branding and CIDA's persona. I think it would be unfortunate if it disappeared from view. It's brought a lot of credit to Canada over the years. So notwithstanding the restructuring and the merger, I think there's a requirement to look at a way in which CIDA can be branded internationally. At least two examples come to mind: one is USAID, and the other is AusAID. Maybe we should be considering CanAID. It could certainly live under the structure that we're talking about.

Finally, reorganizations are dangerous. They aspire to improving matters, but the disruption they produce and the productivity losses they cause make a shambles of the great majority of reorganizations. In my experience, it's better to give good people licence to get around bad structure than to try to fix the structure. That said, we're proposing a new structure, and I think you have to make sure you have the right people to get the transition completed, and then you have to get the right people committed to working the new structure.

Thank you, Mr. Chair.

[The Chair, Conservative, Dean Allison]

Good morning, everyone.

Pursuant to Standing Order 108(2), we are studying the subject matter of clauses 174 to 199, Department of Foreign Affairs, Trade and Development Act, of Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.

I want to welcome our witnesses here today and thank them very much for coming on relatively short notice.

We have Paul Chapin, who is here as an individual.

We have Colin Robertson, who is the vice-president and senior fellow with the Canadian Defence and Foreign Affairs Institute.

Then we have Lucien Bradet, who is the president and chief executive officer of the Canadian Council on Africa.

We'll start with Paul.

We'll move across with our remarks, and then we can get to questions. We have an hour and a half. I believe we have a 10-minute opening statement from each of you. If we could try to stick within that, then we can follow it up with some questions over the following hour.

Paul, I'll turn it over to you, sir.

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

Welcome to the finance committee where we discuss navigable waters, CSIS, the RCMP, anything that gets thrown into one of these omnibus budget bills. Welcome to the new world here.

I know that in my discussions with business and also from my history in collective bargaining that business really wants predictability and stability. When they negotiate a collective agreement it's so that they will have that predictability and stability going out, and it's so that the agreement they freely negotiate is the best one to suit the business conditions that a company is dealing with. I have to say I find it ironic that a government that professes to oppose big government has taken such a Big Brother approach to our crown corporations, and especially to collective bargaining.

Can you describe, based on your management experience in collective bargaining, what could be some potential outcomes to what is now a fairly stable labour relations environment, if these changes that are being proposed in Bill C-60 should come into play?

[Denis Bolduc, General Secretary, Canadian Union of Public Employees, Québec, Canadian Union of Public Employees]

Mr. Chair, ladies and gentlemen members of the Standing Committee on Finance, thank you for having us.

My name is Denis Bolduc. I am the General Secretary of CUPE Quebec and the Regional Vice-President of the Canadian Union of Public Employees.

CUPE has over 600,000 members across the country, but I am appearing before you today more particularly on behalf of two unions that represent CBC employees in Quebec and in Moncton. I am talking about CUPE Local 675, which represents 600 office and professional employees, and the Syndicat des techniciens et artisans du réseau français de Radio-Canada, which represents 1,200 workers.

We have come all the way to Ottawa to tell you that we are strongly opposed to the amendments proposed to the Financial Administration Act in division 17 of Bill C-60. The adoption of those new provisions would wipe away decades of Canadian democratic tradition and turn the country's entire labour relations regime on its head. CUPE cannot support such amendments because they jeopardize fundamental rights such as freedom of speech and association, as well as the right to free collective bargaining.

The adoption of the amendments proposed in division 17 of Bill C-60 would enable the government to interfere in crown corporations' bargaining processes. As soon as the order has been passed, the Treasury Board could give crown corporations negotiating mandates, send observers to participate in talks in order to impose working conditions and prevent the signing of collective agreements they do not find acceptable. All those provisions clearly violate the right to freely associate as we know it in Canada.

As you know, the exercise of that freedom is safeguarded by the Canada Labour Code, which defines the employer as the person who employs the workers. So unions are supposed to negotiate with the employer—in good faith, of course. However, the government is using Bill C-60 to propose that the collective bargaining process be entrusted to a third party—the Treasury Board. That would change the rules of the game, lead to more appeals and, ultimately, harm good labour relations.

As a member of the International Labour Organization, Canada is committed to respecting and promoting the fundamental right to collective bargaining. That is why we are asking you to remove the proposed amendments to the Financial Administration Act from Bill C-60.

Further to the impact on collective bargaining, in CBC's case, Bill C-60 would conflict with the Broadcasting Act. That piece of legislation states the following:The Corporation shall, in the pursuit of its objects and in the exercise of its powers, enjoy freedom of expression and journalistic, creative and programming independence.

The CBC's board of directors is highly independent. It can hire the employees it deems necessary to its operations, determine its employment and remuneration conditions, purchase equipment, and even acquire broadcasting companies without asking anyone's permission.

So the presence of government representatives at the negotiation table would set a dangerous precedent that would reduce the crown corporation's level of independence. It would also open the door to political interference in journalism. A lack of managerial autonomy restricts freedom of expression and turns public broadcasters into state broadcasters. That is not what Canadians want. They want to benefit from information provided by journalists who are free to investigate any topics they choose. No government should have control over a broadcaster of the CBC's stature. Freedom of expression is a fundamental right enshrined in the charter.

The CBC's independence must absolutely be preserved. The public broadcaster must not become a government-controlled propaganda tool, regardless of which government is in power. That is a fundamental principle. So that's another reason to reject government interference in the CBC's management and programming that Bill C-60 would make possible.

In closing, CUPE is wondering why the government is proposing this legislative amendment. Is there a problem that needs to be resolved? If so, it has not been brought to light, and it should be.

So far, all we have seen in this bill is a vicious attack on crown corporation employees and all Canadians. Bill C-60 would amend all the crown corporation empowering legislation by taking away those corporations' negotiating independence. It could also end up turning the public broadcaster into a state-controlled broadcaster.

Once again, I want to thank you for the invitation and for your attention.

[Diane Bergeron, National Director, Government Relations and Advocacy, Canadian National Institute for the Blind]

Thank you.

Before I start, I would just like to explain how I'm going to do this presentation since I can't read print. I am partially sighted, hence the dog at my feet. I'm using a talking computer and I have an earphone in my ear. It will be reading out loud to me what I'm saying afterwards. If I stumble, I apologize.

On behalf of CNIB, I would like to thank the Minister of Finance, the finance committee, and the federal government for their continued leadership and support of the development of equitable library services for Canadians with print disabilities as part of its 2013 economic action plan. An estimated 10% of Canadians have a print disability, and only 6% of published works are available in alternate formats. Canadians with print disabilities include people who are blind or partially sighted, like myself, people with impairments related to comprehension, and people who are unable to hold a book. For Canadians with print disabilities, access to reading material in alternative formats increases literacy, encourages lifelong learning, and improves opportunities for employment and community engagement.

When I was doing my master's degree at Royal Roads University, I was required to do a proposal for a research project. I was excited to find a book written by a Canadian author called, Seeing Beyond Blindness. This book was all about teaching and education, from birth to grave, of blind and partially sighted people. Interestingly, the book was not available in an alternate format. It took me four weeks to receive the book in an alternate format, three weeks after my paper was due. It significantly affected my education.

Access to materials and alternate formats improves quality of life for Canadians, including seniors with print disabilities. It prolongs their ability to enjoy leisure reading and supports their social engagement. In Pigeon Lake, Alberta, not far from where I live in Edmonton, there is a man named Gary. Gary is 80 years old and a good friend of mine. Pigeon Lake is not close to a city and there is no public transportation. Gary is totally blind and although he uses a computer, downloading books is very difficult. Gary relies on receiving his books in DAISY format on a CD in order to listen to books, and that is his chief form of entertainment. Typically, once a week, somebody will go and pick Gary up and take him to town, but other than that, his main source of entertainment, leisure, and interaction is with the books that are provided to him with the DAISY player.

The funding set aside in Bill C-60 will support CNIB's work with public libraries and community leaders to progress towards the creation of a new organization, the national digital hub. This is independent of CNIB and it will support public libraries in their delivery of equitable public library services. The funding will also allow CNIB to acquire and produce, for the national digital hub, over 105,000 additional alternate format materials in e-text, DAISY, audio, CD, and e-books to navigate digital material and Braille. This new content, the CNIB Library's total collection, will be available to Canadians with print disabilities through public libraries, direct service points, and the web.

Once again, we thank the Government of Canada for its leadership and commitment to improving access to library services to Canadians with print disabilities in the 2013 economic action plan.

Thank you.

[George Smith, Fellow and Adjunct Professor, Queen's University, As an Individual]

Thank you, Mr. Chair.

Thank you for the invitation to comment on Bill C-60 as it relates to industrial relations in Canada.

My name is George Smith and I'm a fellow in the School of Policy Studies and an adjunct professor in the School of Industrial Relations and the School of Business at Queen's University. Prior to joining Queen's in 2010, I had a 37-year career in Canadian business, practising industrial relations as the chief management negotiator for Air Canada, Canadian Pacific Railway, and CBC/Radio-Canada. I believe that I can offer you both the academic and practitioner points of view on the impact of the provisions of Bill C-60.

My interest here today is not to represent any party that may be affected by the enactment of this legislation, but rather to outline the significant potential impacts of the proposed legislation on free collective bargaining in Canada.

Please understand that I know about cost control in crown corporations. I was part of the privatization of Air Canada; the revitalization of the Canadian railway industry, including CN as a crown corporation; and the modernization of CBC's collective agreement. This involved tough bargaining, negotiating out what had been negotiated in to meet new competitive pressures. Free collective bargaining achieved these necessary changes. Was it easy? No. Did it work? Yes.

As it relates to the legislation before us, I must first note that this unilateral proposal to change collective bargaining in Canadian crown corporations is the antithesis of my multiple previous experiences with legislative reform of industrial relations in the federal sector. Those previous experiences often involved tripartite consultation with all interested parties before changes to the Canada Labour Code were made by the government in power.

These proposed amendments to the Financial Administration Act buried in Bill C-60 contradict both the spirit and intent of the Canada Labour Code as articulated in its preamble and create a role for government in crown corporation collective bargaining that is not contemplated in the Canada Labour Code.

The preamble in part reads:

AND WHEREAS the Parliament of Canada desires to continue and extend its support to labour and management in their cooperative efforts to develop good relations and constructive collective bargaining practices, and deems the development of good industrial relations to be in the best interests of Canada in ensuring a just share of the fruits of progress to all....

In my four decades of experience, the role of government in the collective bargaining process consistent with this preamble has been to support positive bargaining outcomes through federal mediation and conciliation services. This proposed legislation contemplates an active role for government as a player in the collective bargaining process, approving mandates and supervising negotiations.

Not only is this role contrary to the Canada Labour Code, but the adverse impact on collective bargaining will be significant. Unions will not know who the employer is if the government is controlling mandates in the backroom. Governance processes at crown corporations will surely be confused when CEOs and boards of directors have their powers to approve collective bargaining mandates superseded by Treasury Board, and the collective bargaining process itself will be negatively impacted by the unusual and unwanted presence of Treasury Board at the bargaining table.

Relationships between labour and management, which are fragile at best during stressful negotiations, will be strained to the point of breaking, with the negative consequence of ensuring labour disputes. There will be costs to the economy. In some, an already complex process will be complicated to the point where, in my considered professional opinion, it will become totally dysfunctional.

Finally, my comments must be taken in the context of previous interventions of this government into industrial relations that are inconsistent with the Canada Labour Code as written. Since May 2011 there have been five instances of back-to-work legislation that have cumulatively threatened collective bargaining in Canada, including the right to strike or lockout. As well, I might add that substituting interest arbitration for the right to strike has not achieved the desired bargaining outcomes in most of these cases. The CEO of Air Canada recently declared his collective agreement uncompetitive as he launched another cost-cutting process.

This heavy-handed, ad hoc government intervention has become enough of a pattern that a proper policy debate of the potential reform to the Canada Labour Code is absolutely necessary.

I urge you to consider the significant impact of these sections of Bill C-60 in this context and amend the bill. Alternatively, send these proposed amendments to the human resources committee to review them in the context of the entire Canada Labour Code. Or, ideally, recommend the creation of a tripartite consultative process under the auspices of the Minister of Labour to review these and other potential amendments to the Canada Labour Code.

The fundamental Canadian freedom of collective bargaining is being threatened. I submit that a full public policy debate is necessary before changes of this significance are made. Canadians deserve nothing less.

Thank you.