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.

Economic Action Plan 2013 Act, No. 1

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

Mr. Speaker, yes, we heard from a representative of the Retail Council of Canada, at the finance committee, who stressed the anti-competitive nature of these tax hikes on Canadian consumer goods. The Conservatives are quick to point out that countries such as China and South Korea do not need these tariff exemptions anymore. However, in fact, what they would be doing would be increasing the cost to Canadians, which would mean that more Canadians would buy their products south of the border.

The House resumed consideration of the motion that Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures, be read the third time and passed, and of the amendment.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I would like to share my time with the hon. member for Ottawa—Vanier.

In my time, I would like to focus on two main items. The first is the contention we hear all the time from the government that Canada is doing relatively well. It is quite easy to be doing relatively well compared with the eurozone for example, which is in recession. However, I would acknowledge that relative to many countries, Canada is doing—

[The Deputy Speaker]

Since the member is in the first round of debate on the bill, splitting his time requires unanimous consent from the House. Does the hon. member have unanimous consent to split his time?

[Some hon. members]

Agreed.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I want to start with a bit of a history lesson. To the extent that Canada is doing relatively well, it has nothing to do with the current government and everything to do with the previous Liberal governments. Members may laugh, but it happens to be true, and let me explain it.

One reason Canada is doing well is because our fiscal house is in order. A second reason Canada is doing well is because we did not deregulate our banks as the Americans and British did. The third reason we are doing relatively well is because of our strong resource set.

I do not think the members of the Conservative Party of Canada can say that they put all the oil and minerals in the ground. Neither can the Liberal Party, nor can the NDP. That is what we might call “an act of God”, so no political party can claim credit for that. However, the other items, putting the fiscal house in order and keeping strong regulation of banks, were both achieved by the Liberals in the 1990s.

Thinking back to 1993, we might remember that Canada had a deficit of $43 billion, which was inherited by the new Liberal government, and there was a state of fiscal crisis in the air. There was the idea that Canada was becoming an honorary third world country and the IMF would have to come in and clean up the mess. That is why the Chrétien government, with Paul Martin as finance minister, acted swiftly to eliminate that deficit in a period of about two years and then proceeded to pay down debt for close to ten years.

Whereas at the beginning, in 1993, we were the basket case of the G7 fiscally speaking, by the time the Conservatives came to power, we had the strongest record of the G7 and it was thanks to those actions taken by the Liberal government.

The Conservatives like to criticize the Liberal government for cutting so much so quickly, but if they think back to that time, they will remember that the Reform Party of the day was telling the Liberals to cut more, not to cut less. That is point number one.

Point number two has to do with banking. Partly the reason why the Americans and the British got into so much trouble is that they went down the path of deregulating their banks, or allowing their banks to regulate themselves, whereas, in Canada we did not do that. As a consequence, our banks remained more conservatively managed. The other thing was that the federal government of the day said, no, to the proposed bank mergers. Even though I worked for Royal Bank at that time, I became convinced after the financial crisis that it was certainly the right decision. Otherwise, the banks would have become bigger and more international, more like the big American and British banks.

There are three reasons Canada is doing relatively well. First, we balanced the budget and reduced the debt-to-GDP ratio. Second, we refused to allow the banks to regulate themselves. Finally, we have a robust resource sector.

Therefore, when Conservatives say that Canada is doing relatively well, they should add this sentence: “Thanks to previous Liberal governments”. That would be my humble suggestion for the government, which I understand is likely to fall on deaf ears.

The next section of my comments is about the government's budgetary management, which I would contend has not been good, and there are several points on this.

First, the Conservatives are assuming that the growth rate next year will just jump right back up to 2.5% from its much lower level today. I cannot totally blame the government for this because admittedly those are private sector forecasts and private sector econometric models typically do project growth rates jumping back. However, this seems to be a recession unlike others, where I think we might get into trouble if we simply assume growth rates jump back and that helps to reduce the deficit. Therefore, that is a risk for the current government.

Second, the Conservatives have not done their prudence very well. I remember back in the 1990s, when I was at the Royal Bank, having a meeting with Paul Martin and other economists about how we should deal with this prudence. I remember suggesting a very scientific idea: prudence of $1 billion in year one; $2 billion in year two; $3 billion in year three; $4 billion in year four. I do not know if they did exactly that, but the idea is that the further out into the future we get, the more risky and the less certain things are, so they should have the amount of prudence in the budget going up over time into the future. The government just keeps it flat, so that displays a lack of fiscal prudence.

On catching tax cheaters, I think the Conservatives are making an overly optimistic assumption that they will get $500 million in taxes next year that should have been paid but were not, while at the same time cutting the staff and budget of CRA. I do not think that makes any sense whatsoever.

I think it is wrong for them to boast about their multiple-billion, 10-year infrastructure program when nothing significant will happen until several years out. It is very much back-end loaded. In fact, in the near term they have actually cut the amount that is devoted to infrastructure.

The final point I would make is that they simply lost $3.1 billion, the money that was to have been spent on anti-terrorism activities. The Auditor General says the information does not exist to find it. I do not understand that. I will be meeting with the Auditor General's office later today, and I hope to understand better how it is possible to lose track of $3.1 billion.

This is a government that prides itself on its fiscal management. How can one be proud of one's fiscal management if one loses track of $3.1 billion?

I would argue that this has been a government characterized by sloppy fiscal management, inadequate prudence, and other matters that do not add up to a prudent management of the budget.

The last point I would make is on this business about jobs without people and people without jobs. It is a really important issue. Attention should be directed to it. What the government has done is a total sham because it is not putting one more penny into it. Right now, the government transfers $2.5 billion per year to the provinces for training. It appears it is going to take that money back, or some of it, and then require the provinces and companies to put up more money.

How is that going to work? Often the provincial governments are in a worse deficit situation than the federal government. I know, for example, that the Government of Ontario is very concerned that the federal government will take away money that Ontario uses to train very disadvantaged people and then use it for other purposes. This would mean that the training for those disadvantaged people, who are probably not in the Conservative core, would simply disappear. The Ontario government's fiscal position is certainly less strong than that of the current government.

In closing, what I said is quite simple. First, when the government says that Canada has managed quite well, it should add “thanks to the actions of the previous Liberal government”. Second, the Conservatives have not done a good job of managing the budget.

Finally, there is actually no money in the program for training. The thing is a sham. It is not even clear if it will get off its feet. A number of provinces have already said that they have no interest in participating.

[Lois Brown, Conservative, Parliamentary Secretary to the Minister of International Cooperation]

Mr. Speaker, it is always interesting to look at history when we are looking at it in hindsight from the perspective of that member.

The employees do not say thank you to the previous Liberal government because that government stole $52 billion out of the EI fund to pay down the debt. It took $25 billion in transfer payments in health care and education from the provinces to pay down that debt, so it put it on the backs of the provinces.

However, the employees of today are saying thank you to our government, for jobs, for growth, for long-term prosperity. Today we heard that a net million new jobs have been created in this country since the worst of the downturn.

I wonder if that member would like to speak to how that has been generated in these last few years under this government.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, the hon. member should understand when she complains about us cutting transfers to the provinces, that we did, but we also cut federal government spending in a proportional way. She should remember that her colleagues in those days did not say “cut less”; they said to us “cut more”. The Reform Party of the day said Liberals were not cutting enough. That made it politically easier for us to do. However, she should not rewrite history. She should understand that her own colleagues of the day were telling us to cut more and not to cut less.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, I would like to thank my colleague for his speech.

I would like to draw his attention to a specific item in the bill, namely co-operatives. We know that the government has decided to treat co-operatives like the big banks, despite their very different structure.

Can he say a few words about this aspect of the budget?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I totally agree with what my colleague said.

I am not going to say much because I think my colleague is going to elaborate on this issue in a few minutes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I think my hon. colleague ran out of time, and toward the end he mentioned that this training credit is not going to be available. We are seeing a whole bunch of money that is being spent by the present government on these economic action plan ads that say the new training credit is now available subject to parliamentary approval. If the bill does pass in the next couple of days or so, will Canadians have those training credits available to them? Could he comment on that?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, there are two barriers to this program. One barrier is passing it through Parliament, and I am sure it will. The second is whether they will be able to get agreements with the provinces and whether it will ever happen. Even if the law passes, there is no guarantee that the provinces would agree. Therefore, it still may never happen, even when it is the law. That is why I think it is totally inappropriate to advertise a program that may never come to pass.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, this time I will try to get a lengthier response from the hon. member. I want to talk about organizations, including the CBC.

The Conservative government is going to interfere in the CBC's negotiations when most of the CBC's budget is allocated by the government.

Does he agree that this is unnecessary interference?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, it appears that the member has chosen the second subject my colleague will be addressing.

I will be brief. I fully agree that it is inappropriate. In the past, crown corporations like VIA Rail and the CBC have had some independence from the government, and the fact that the government plans to send a Treasury Board official to these negotiations, to my mind, qualifies as interference.

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

Mr. Speaker, I thank my hon. colleague from Markham—Unionville for sharing his time with me. I also wish to inform the member for Louis-Hébert that the two subjects I plan to discuss have to do with credit unions and crown corporations. I will begin with credit unions.

The matter of credit unions is rather troubling, in the sense that we have a very adequate system. Credit unions have been able to offer services in communities where sometimes the banks do not go because the profit margins are not sufficient for the banks in small towns throughout this country, yet they are going to be suffering a rather dramatic setback because of the implementation of Bill C-60. When I asked why the government had chosen to do this, the Minister of Finance and others suggested that it is because the credit unions are now sufficiently large enough to compete and that the banks have to be protected. Though they did not quite say this, it was almost insinuated in their responses.

I need to provide some information about the relative comparison of the banks versus credit unions. The top five banks in this country, in 2012 numbers, have dramatically different sized assets than credit unions. The Royal Bank, in 2012, had $455 billion of assets under management; TD had $429 billion; Scotiabank had $347 billion; CIBC had $327 billion; and BMO had $278 billion. The largest credit union, Vancity, had $17 billion. I keep going back to the smallest one, which is First West, also in B.C., which had $5.9 billion. The other three are Coast Capital, at $12.6 billion; Servus, in Alberta, at $12.2 billion; and, finally, Meridian, in Ontario, at $8.8 billion. These numbers have been provided to all parliamentarians. If they have not, I would be quite prepared to share them. This has come from the Credit Union Central of Canada and these are publicly available numbers.

The largest credit union, Vancity, is 16 times smaller than the fifth largest bank, BMO. To say that we have to change the rules to allow for competition is ludicrous. The corporate structure of the two institutions is totally different. Because of the co-operative structure of credit unions, they cannot issue share capital. Basically, they have to accumulate capital through retained earnings; whereas the banks can issue share capital, as they do on a fairly regular basis. Forty years ago governments accepted that to enable the credit unions to function properly and build up capital, they would be treated as small businesses, and the tax rate of small businesses would apply to them.

I found it rather ironic during question period that one of my colleagues asked the Minister of Health a question about a bill that was introduced yesterday and the need for voices of communities to be heard. The government introduced this change in taxation of credit unions without any consultation whatsoever. Last summer there were five days of hearings that were held by a specially constituted committee of the House. They were unanimously agreed to, as per a motion that I put forward. The committee heard from the government, credit unions and the banks, and nobody at any time suggested that should be done or hinted that it might be happening. So much for consultation. Only when it suits the government, it seems, will it consult.

To do what the government has done, not consulting and then proposing that it is to allow for a level playing field, is absolutely not accurate. The consequence of this is that $200 million, which is basically the increased taxation that will be applied to credit unions over the next five years, will be that much less for small businesses in these communities and community economic development. This totally goes against the grain of what the government is trying to say in its budget. It says it welcomes competition, especially in the banking and financial sectors, and by introducing this measure it has actually reduced the competition and the ability of small institutions, the largest being 16 times smaller than the smallest of the big five, to compete.

Liberals do not understand what has driven the government to do this and whether it might be the banks saying that they do not need competition whatsoever. If that is the case, Canadian consumers, especially rural Canadians, will actually be negatively affected by this measure. That is certainly why I intend to vote against this measure, and I suspect most people on this side will vote against it as well.

The second issue has to do with crown corporations and section 17 of Bill C-60. Basically, the government is granting itself the power to interfere in crown corporations. It is absolutely incredible that this government wants to do such a thing. I think this shows utter contempt for the usual governance practices.

All crown corporations have an executive and a board of directors and that is usually appointed by the government. Perhaps one or two members may already be in place before the government makes it appointments, but that is how the government delegates it authority to manage crown corporations.

I would like to read some parts of the bill currently before the House, a bill that amends the Financial Administration Act. The first excerpt concerns the amendment cited in subsection 89.8(2):

If the Governor in Council directs a crown corporation to have its negotiating mandate approved, the Treasury Board may impose any requirement on the crown corporation with respect to that negotiating mandate.

The bill then goes even further on another matter. It gives the government the right to attend the negotiations. We are talking about collective bargaining and therefore unionized workers. However, there is also subsection 89.9(1), which states:

The Governor in Council [cabinet] may, by order, direct a Crown corporation to obtain the Treasury Board’s approval before the Crown corporation fixes the terms and conditions of employment of its non-unionized employees who are not appointed by the Governor in Council.

Thus, the government decided that it wanted to give itself the authority to bypass the boards of directors that it appoints, and to directly interfere in and infiltrate crown corporations. To start out with, that is already too much. It is totally inappropriate for any crown corporation.

More than anything else, what really crosses the line in a democratic society is the fact that the government wants to give itself the right to interfere in CBC/Radio-Canada. The Canadian public should really wake up, because we are dealing here with a measure that undermines the democratic capacity of a society.

I will also read section 1 of the Charter of Rights and Freedoms:

The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

Section 2 sets out fundamental freedoms, which include:

(b) freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication;

This government wants to give itself the right to interfere in CBC/Radio-Canada, which is a public news and broadcasting corporation. I hope that this bill and this division will be challenged in court, if the bill is passed, as we expect it will be. It has a majority in both chambers.

If the bill passes, we will have taken more than just a small step down a slippery slope. We will be undermining our democracy and our freedom of the press, and allowing the government to give itself the right to interfere in a crown corporation that has the responsibility to communicate with Canadians. This is unprecedented, and I hope that this will never happen again.