Bill C-31 (Historical)

Economic Action Plan 2014 Act, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures

Part 1 implements income tax measures and related measures proposed in the February 11, 2014 budget. Most notably, it
(a) increases the maximum amount of eligible expenses for the adoption expense tax credit;
(b) expands the list of expenses eligible for the medical expense tax credit to include the cost of the design of individualized therapy plans and costs associated with service animals for people with severe diabetes;
(c) introduces the search and rescue volunteers tax credit;
(d) extends, for one year, the mineral exploration tax credit for flow-through share investors;
(e) expands the circumstances in which members of underfunded pension plans can benefit from unreduced pension-to-RRSP transfer limits;
(f) eliminates the need for individuals to apply for the GST/HST credit and allows the Minister of National Revenue to automatically determine if an individual is eligible to receive the credit;
(g) extends to 10 years the carry-forward period with respect to certain donations of ecologically sensitive land;
(h) removes, for certified cultural property acquired as part of a gifting arrangement that is a tax shelter, the exemption from the rule that deems the value of a gift to be no greater than its cost to the donor;
(i) allows the Minister of National Revenue to refuse to register, or revoke the registration of, a charity or Canadian amateur athletic association that accepts a donation from a state supporter of terrorism;
(j) reduces, for certain small and medium-sized employers, the frequency of remittances for source deductions;
(k) improves the Canada Revenue Agency’s ability to provide feedback to the Financial Transactions and Reports Analysis Centre of Canada; and
(l) requires a listing of outstanding tax measures to be tabled in Parliament.
Part 1 also implements other selected income tax measures. Most notably, it
(a) introduces transitional rules relating to the labour-sponsored venture capital corporations tax credit;
(b) requires certain financial intermediaries to report to the Canada Revenue Agency international electronic funds transfers of $10,000 or more;
(c) makes amendments relating to the introduction of the Offshore Tax Informant Program of the Canada Revenue Agency;
(d) permits the disclosure of taxpayer information to an appropriate police organization in certain circumstances if the information relates to a serious offence; and
(e) provides that the Business Development Bank of Canada and BDC Capital Inc. are not financial institutions for the purposes of the Income Tax Act’s mark-to-market rules.
Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures proposed in the February 11, 2014 budget by
(a) expanding the GST/HST exemption for training that is specially designed to assist individuals with a disorder or disability to include the service of designing such training;
(b) expanding the GST/HST exemption for services rendered to individuals by certain health care practitioners to include professional services rendered by acupuncturists and naturopathic doctors;
(c) adding eyewear specially designed to treat or correct a defect of vision by electronic means to the list of GST/HST zero-rated medical and assistive devices;
(d) extending to newly created members of a group the election that allows members of a closely-related group to not account for GST/HST on certain supplies between them, introducing joint and several (or solidary) liability for the parties to that election for any GST/HST liability on those supplies and adding a requirement to file that election with the Canada Revenue Agency;
(e) giving the Minister of National Revenue the discretionary authority to register a person for GST/HST purposes if the person fails to comply with the requirement to apply for registration, even after having been notified by the Canada Revenue Agency of that requirement; and
(f) improving the Canada Revenue Agency’s ability to provide feedback to the Financial Transactions and Reports Analysis Centre of Canada.
Part 2 also implements other GST/HST measures by
(a) providing a GST/HST exemption for supplies of hospital parking for patients and visitors, clarifying that the GST/HST exemption for supplies of a property, when all or substantially all of the supplies of the property by a charity are made for free, does not apply to paid parking and clarifying that paid parking provided by charities that are set up or used by municipalities, universities, public colleges, schools and hospitals to operate their parking facilities does not qualify for the special GST/HST exemption for parking supplied by charities;
(b) clarifying that reports of international electronic funds transfers made to the Canada Revenue Agency may be used for the purposes of the administration of the GST/HST;
(c) making amendments relating to the introduction of the Offshore Tax Informant Program of the Canada Revenue Agency;
(d) permitting the disclosure of confidential GST/HST information to an appropriate police organization in certain circumstances if the information relates to a serious offence; and
(e) clarifying that a person cannot claim input tax credits in respect of an amount of GST/HST that has already been recovered by the person from a supplier.
Part 3 implements excise measures proposed in the February 11, 2014 budget by
(a) adjusting the domestic rate of excise duty on tobacco products to account for inflation and eliminating the preferential excise duty treatment of tobacco products available through duty free markets;
(b) ensuring that excise tax returns are filed accurately through the addition of a new administrative monetary penalty and an amended criminal offence for the making of false statements or omissions, consistent with similar provisions in the GST/HST portion of the Excise Tax Act; and
(c) improving the Canada Revenue Agency’s ability to provide feedback to the Financial Transactions and Reports Analysis Centre of Canada.
Part 3 also implements other excise measures by
(a) permitting the disclosure of confidential information to an appropriate police organization in certain circumstances if the information relates to a serious offence; and
(b) making amendments relating to the introduction of the Offshore Tax Informant Program of the Canada Revenue Agency.
In addition, Part 3 amends the Air Travellers Security Charge Act, the Excise Act, 2001 and the Excise Tax Act to clarify that reports of international electronic funds transfers made to the Canada Revenue Agency may be used for the purposes of the administration of those Acts.
Part 4 amends the Customs Tariff. In particular, it
(a) reduces the Most-Favoured-Nation rates of duty and, if applicable, rates of duty under the other tariff treatments on tariff items related to mobile offshore drilling units used in oil and gas exploration and development that are imported on or after May 5, 2014;
(b) removes the exemption provided by tariff item 9809.00.00 and makes consequential amendments to tariff item 9833.00.00 to apply the same tariff rules to the Governor General that are applied to other public office holders; and
(c) clarifies the tariff classification of certain imported food products, effective November 29, 2013.
Part 5 enacts the Canada–United States Enhanced Tax Information Exchange Agreement Implementation Act and amends the Income Tax Act to introduce consequential information reporting requirements.
Part 6 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 6 provides for payments to compensate for deductions in certain benefits and allowances that are payable under the Canadian Forces Members and Veterans Re-establishment and Compensation Act, the War Veterans Allowance Act and the Civilian War-related Benefits Act.
Division 2 of Part 6 amends the Bank of Canada Act and the Canada Deposit Insurance Corporation Act to authorize the Bank of Canada to provide banking and custodial services to the Canada Deposit Insurance Corporation.
Division 3 of Part 6 amends the Hazardous Products Act to better regulate the sale and importation of hazardous products intended for use, handling or storage in a work place in Canada in accordance with the Regulatory Cooperation Council Joint Action Plan initiative for work place chemicals. In particular, the amendments implement the Globally Harmonized System of Classification and Labelling of Chemicals with respect to, among other things, labelling and safety data sheet requirements. It also provides for enhanced powers related to administration and enforcement. Finally, it makes amendments to the Canada Labour Code and the Hazardous Materials Information Review Act.
Division 4 of Part 6 amends the Importation of Intoxicating Liquors Act to authorize individuals to transport beer and spirits from one province to another for their personal consumption.
Division 5 of Part 6 amends the Judges Act to increase the number of judges of the Superior Court of Quebec and the Court of Queen’s Bench of Alberta.
Division 6 of Part 6 amends the Members of Parliament Retiring Allowances Act to prohibit parliamentarians from contributing to their pension and accruing pensionable service as a result of a suspension.
Division 7 of Part 6 amends the National Defence Act to recognize the historic names of the Royal Canadian Navy, the Canadian Army and the Royal Canadian Air Force while preserving the integration and the unification achieved under the Canadian Forces Reorganization Act and to provide that the designations of rank and the circumstances of their use are prescribed in regulations made by the Governor in Council.
Division 8 of Part 6 amends the Customs Act to extend to 90 days the time for making a request for a review of a seizure, ascertained forfeiture or penalty assessment and to provide that requests for a review and third-party claims can be made directly to the Minister of Public Safety and Emergency Preparedness.
Division 9 of Part 6 amends the Atlantic Canada Opportunities Agency Act to provide for the dissolution of the Atlantic Canada Opportunities Board and to repeal the requirement for the President of the Atlantic Canada Opportunities Agency to submit a comprehensive report every five years on the Agency’s activities and on the impact those activities have had on regional disparity.
Division 10 of Part 6 dissolves the Enterprise Cape Breton Corporation and authorizes, among other things, the transfer of its assets and obligations, as well as those of its subsidiaries, to either the Atlantic Canada Opportunities Agency or Her Majesty in right of Canada as represented by the Minister of Public Works and Government Services. It also provides that the employees of the Corporation and its subsidiaries are deemed to have been appointed under the Public Service Employment Act and includes provisions related to their terms and conditions of employment. Furthermore, it amends the Atlantic Canada Opportunities Agency Act to, among other things, confer on the Atlantic Canada Opportunities Agency the authority that is necessary for the administration, management, control and disposal of the assets and obligations transferred to the Agency. It also makes consequential amendments to other Acts and repeals the Enterprise Cape Breton Corporation Act.
Division 11 of Part 6 provides for the transfer of responsibility for the administration of the programs known as the “Online Works of Reference” and the “Virtual Museum of Canada” from the Minister of Canadian Heritage to the Canadian Museum of History.
Division 12 of Part 6 amends the Nordion and Theratronics Divestiture Authorization Act to remove certain restrictions on the acquisition of voting shares of Nordion.
Division 13 of Part 6 amends the Bank Act to add regulation-making powers respecting a bank’s activities in relation to derivatives and benchmarks.
Division 14 of Part 6 amends the Insurance Companies Act to broaden the Governor in Council’s authority to make regulations respecting the conversion of a mutual company into a company with common shares.
Division 15 of Part 6 amends the Motor Vehicle Safety Act to support the objectives of the Regulatory Cooperation Council to enhance the alignment of Canadian and U.S. regulations while protecting Canadians. It introduces measures to accelerate and streamline the regulatory process, reduce the administrative burden for manufacturers and importers and improve safety for Canadians through revised oversight procedures and enhanced availability of vehicle safety information.
The amendments to the Railway Safety Act and the Transportation of Dangerous Goods Act, 1992 modernize the legislation by aligning it with the Cabinet Directive on Regulatory Management.
This Division also amends the Safe Food for Canadians Act to authorize the Governor in Council to make regulations respecting activities related to specified fresh fruits and vegetables, including requiring a person who engages in certain activities to be a member of a specified entity or organization. It also repeals the Board of Arbitration.
Division 16 of Part 6 amends the Telecommunications Act to set a maximum amount that a Canadian carrier can charge to another Canadian carrier for certain roaming services.
Division 17 of Part 6 amends the Canada Labour Code to allow employees to interrupt their compassionate care leave or leave related to their child’s critical illness, death or disappearance in order to take leave because of sickness or a work-related illness or injury. It also amends the Employment Insurance Act to facilitate access to sickness benefits for claimants who are in receipt of compassionate care benefits or benefits for parents of critically ill children.
Division 18 of Part 6 amends the Canadian Food Inspection Agency Act to provide that fees fixed under that Act for the use of a facility provided by the Canadian Food Inspection Agency under the Safe Food for Canadians Act as well as fees fixed for services, products and rights and privileges provided by the Agency under that Act are exempt from the application of the User Fees Act.
Division 19 of Part 6 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things, enhance the client identification, record keeping and registration requirements for financial institutions and intermediaries, refer to online casinos, and extend the application of the Act to persons and entities that deal in virtual currencies and foreign money services businesses. Furthermore, it makes modifications in regards to the information that the Financial Transactions and Reports Analysis Centre of Canada may receive, collect or disclose, and expands the circumstances in which the Centre or the Canada Border Services Agency can disclose information received or collected under the Act. It also updates the review and appeal provisions related to cross-border currency reporting and brings Part 1.1 of the Act into force.
Division 20 of Part 6 amends the Immigration and Refugee Protection Act and the Economic Action Plan 2013 Act, No. 2 to, among other things,
(a) require certain applications to be made electronically;
(b) provide for the making of regulations regarding the establishment of a system of administrative monetary penalties for the contravention of conditions applicable to employers hiring foreign workers;
(c) provide for the termination of certain applications for permanent residence in respect of which a decision as to whether the selection criteria are met is not made before February 11, 2014; and
(d) clarify and strengthen requirements related to the expression of interest regime.
Division 21 of Part 6 amends the Public Service Labour Relations Act to clarify that an adjudicator may grant systemic remedies when it has been determined that the employer has engaged in a discriminatory practice.
It also clarifies the transitional provisions in respect of essential services that were enacted by the Economic Action Plan 2013 Act, No. 2.
Division 22 of Part 6 amends the Softwood Lumber Products Export Charge Act, 2006 to clarify how payments to provinces under section 99 of that Act are to be determined.
Division 23 of Part 6 amends the Budget Implementation Act, 2009 so that the aggregate amount of payments to provinces and territories for matters relating to the establishment of a Canadian securities regulation regime may be fixed through an appropriation Act.
Division 24 of Part 6 amends the Protection of Residential Mortgage or Hypothecary Insurance Act and the National Housing Act to provide that certain criteria established in a regulation may apply to an existing insured mortgage or hypothecary loan.
Division 25 of Part 6 amends the Trade-marks Act to, among other things, make that Act consistent with the Singapore Treaty on the Law of Trademarks and add the authority to make regulations for carrying into effect the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. The amendments include the simplification of the requirements for obtaining a filing date in relation to an application for the registration of a trade-mark, the elimination of the requirement to declare use of a trade-mark before registration, the reduction of the term of registration of a trade-mark from 15 to 10 years, and the adoption of the classification established by the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks.
Division 26 of Part 6 amends the Trade-marks Act to repeal the power to appoint the Registrar of Trade-marks and to provide that the Registrar is the person appointed as Commissioner of Patents under subsection 4(1) of the Patent Act.
Division 27 of Part 6 amends the Old Age Security Act to prevent the payment of Old Age Security income-tested benefits for the entire period of a sponsorship undertaking by removing the current 10-year cap.
Division 28 of Part 6 enacts the New Bridge for the St. Lawrence Act, respecting the construction and operation of a new bridge in Montreal to replace the Champlain Bridge and the Nuns’ Island Bridge.
Division 29 of Part 6 enacts the Administrative Tribunals Support Service of Canada Act, which establishes the Administrative Tribunals Support Service of Canada (ATSSC) as a portion of the federal public administration. The ATSSC becomes the sole provider of resources and staff for 11 administrative tribunals and provides facilities and support services to those tribunals, including registry, administrative, research and analysis services. The Division also makes consequential amendments to the Acts establishing those tribunals and to other Acts related to those tribunals.
Division 30 of Part 6 enacts the Apprentice Loans Act, which provides for financial assistance for apprentices to help with the cost of their training. Under that Act, apprentices registered in eligible trades will be eligible for loans that will be interest-free until their training ends.

[Mark Schaan]

Then we'll switch to the Trade-marks Act changes. This is part 4, division 7, subdivision B, clauses 214 to 242.

Just by very quick way of background, this is in part related to concerns from trademark stakeholders about the possibility for what some people call “trademark squatters”, individuals who take out trademarks with no intention of using them for the purposes of trying to shake down individuals who they believe are already using that trademark in a non-trademarked way, or likely will anticipate the need of someone for that trademark.

What this does is a number of things. First, it adds bad faith as a ground of opposition to the register of a trademark and for the invalidation of a trademark.

Second, it prevents the owner of a registered trademark from obtaining relief for acts done contrary to that trademark during the first three years after the trademark is registered, unless the trademark was in use during that period or special circumstances exist that excuse the absence of use.

Very quickly, without getting into too much of the technical details of trademark law, one of the exceptions to use in the trademark process is during the first three years of a trademark, because, in many cases, you will have trademarked a good, but you can't use it because you're just getting going.

Our concern was that it could be a trademark squatter who is hiding under that three-year exception to be able to potentially still use that three years to shake someone down for cash. What we have said is that, during those three years, you have no access to remedies, so you can't pursue damages against that individual if you're not using the trademark.

We also clarify that the prohibitions in subparagraph 9(1)(n)(iii) do not apply in section 11 of the act with respect to a badge, crest, emblem or mark that was the subject of a public notice of adoption and used as an official mark if the entity that made the request for the public notice is not a public authority or no longer exists.

Very briefly, this relates to the system of official marks in Canada. Official marks are, by and large, relegated or are subscribed to public authorities and public entities. The Canada Wordmark is a good example. There is a whole host of other badges and crests that are official marks. They're put on the registry by public authorities. There are a lot of them, and one of the challenges is that some of the people who put them on the list weren't public authorities under the definition, so when people seek to use that official mark, they're prevented from doing so because this public authority put the official mark on the registry.

The other thing is that many of them no longer exist. There are many official marks related to the 1976 Montreal Olympics. There are many related to Canada Games in most cities and provinces across the country, and many for events that took place decades ago. People are prevented from using those official marks currently, despite the fact that they can't reach an agreement with the entity to use them, because the entity doesn't exist anymore. This, essentially, will allow people to be able to use those official marks without having to seek an entity when the entity is no longer in place.

We then also modernized the conduct of various proceedings before the registrar of trademarks under the act, including by providing the registrar with additional powers in such proceedings. This is essentially to give some additional teeth to the trademarks opposition board, including the opportunity for case management and the ability to potentially levy costs in cases where people are making frivolous use of the trademarks opposition board.

Finally, we make certain housekeeping amendments to provisions of the act that are enacted by the Economic Action Plan 2014 Act, No. 1, and the Combating Counterfeit Products Act, which is essentially to bring us in line with changes in anticipation of Canada's accession to the Madrid protocol and that lay on from these provisions that I laid out earlier.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order. As shown on the agenda, we have a bit of committee business to do in public and then we will move in camera to give drafting instructions for the report on the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Mr. Kmiec, I believe you have a motion.

[Daniel Therrien, Privacy Commissioner of Canada, Office of the Privacy Commissioner of Canada]

Thank you, Mr. Chair.

I’d like to thank the members of the committee for the opportunity to appear before you today as part of your statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, or PCMLTFA.

We, of course, support Canada's efforts to combat money laundering and terrorist financing. However, the manner in which these efforts are undertaken must strike an appropriate balance between the need to combat such activities and respecting privacy rights of Canadians.

The most apparent privacy implication with this regime is that it casts a wide net capturing a great deal of information about law-abiding Canadians conducting financial transactions, with a view to uncovering threats to national security or incidents of money laundering.

In our previous parliamentary briefs on Bill C-51 and Bill C-59, we signalled concerns around information collection and sharing regimes in the context of national security.

Specifically, we have highlighted the need for rigorous legal standards around the collection and sharing of personal information, effective oversight, and minimization of risks to the privacy of law-abiding Canadians, in part through prudent retention and destruction practices.

As you are aware, subsection 72(2) of the PCMLTFA provides my office with a mandate to conduct biennial reviews of how FINTRAC protects information it receives or collects under this act. We can also conduct reviews under section 37 of the Privacy Act.

All of our audits have identified issues with FINTRAC receiving and retaining reports that do not meet legislative thresholds for reporting.

In 2014, the PCMLTFA was amended by Bill C-31 to add subsection 54(2), which requires that FINTRAC destroy information in its holdings that was not required to be reported.

Although FINTRAC has implemented measures to validate incoming reports, a significant improvement, we continue to identify information in FINTRAC databases that did not meet thresholds and should not have been retained.

Also, we have generally found FINTRAC to have a comprehensive approach to security, including controls to safeguard personal information. Our most recent audit did identify governance issues between FINTRAC and Shared Services Canada, which FINTRAC has committed to addressing.

Beyond these issues, which we are mandated to review under the PCMLTFA, our principal concern, based on our experience reviewing FINTRAC over the past 10 years, relates to the lack of proportionality of the regime. Disclosures to law enforcement and other investigative agencies made in a given fiscal year represent a very small number when compared with the information received during that same time frame. For every 10,000 reports received, one disclosure is made.

Information received is also retained for long periods. FINTRAC's retention of undisclosed reports increased from five to 10 years in 2007.

Even if one accepts that sharing financial transaction data related to law-abiding citizens may lead to the identification of threats of money laundering or terrorist financing activities, once that information is analyzed and leads to the conclusion that someone is not a threat, it should no longer be retained.

More broadly, we have noted a trend to broaden the regime over the years, and we note the Department of Finance Canada's vision of moving towards a holistic information collection scheme, which would create an environment supporting increased analytics and information sharing. We have already seen discussion about lowering existing thresholds for reporting, which could be done through regulations without parliamentary approval. In the consultation paper, the Department of Finance Canada also suggests increasing the number of reporting agencies and establishing a new model for engagement of the private sector.

While I appreciate that a holistic approach to the collection and sharing of information might be useful to identify threats, what is proposed, unless appropriate privacy safeguards are adopted, would further exacerbate our concerns with proportionality.

Instead, I would suggest that a risk-based approach be adopted in order to minimize the risk of over-collecting and retaining the financial and personal information of law-abiding citizens. Under such an approach, FINTRAC, based on a thorough risk-based analysis of its data, would develop criteria to limit collection, sharing, and retention to only situations likely to represent potential manifestations of terrorist financing or money laundering.

We realize this may be challenging, but as privacy experts, we at the OPC believe we can play a role in the assessment of these factors, which leads me to this: currently our review mandate, under the PCMLTFA and the Privacy Act, is limited to ensuring that these statutes and regulations, as enacted, including monetary thresholds for collection, are respected.

We think a more useful contribution would be to provide advice, after review, on amendments that could be made, to either the statutes or the regulations or the practices of FINTRAC, to ensure greater proportionality, including the assessment of risk factors that might govern information collection, sharing, and retention.

The government is recommending that the PCMLTFA be amended to provide that the reviews we currently undertake every two years under section 72 now occur every four years. We agree in part, but we would recommend a change of purpose for these reviews.

First, we would recommend that the purpose of our reviews under the act be modified to include advice or recommendations on proportionality, as just mentioned.

Second, they would begin at least one year before every anticipated five-year review that Parliament must undertake. The OPC would continue to conduct compliance reviews under section 37 of the Privacy Act, which would not need to be amended. As it relates to proportionality, the committee may wish to consider part 4 of Bill C-59, currently before Parliament, concerning CSIS datasets and their retention, which might be instructive.

Under that model, CSIS must clean data promptly—that is, within 90 days—and can retain Canadian datasets only if the Federal Court is satisfied that doing so is likely to assist in the performance of CSIS's mandate, including the detection of threats to the national security of Canada. In addition, with respect to any contemplated changes to reduce existing thresholds through regulations, which would also affect proportionality, I would reiterate my recommendation in the context of Privacy Act reform, that government institutions should be legally required to consult with my office on draft legislation and regulations with privacy implications before they are tabled.

My written statement now goes into questions of oversight. Do I have time?

Amendments to Standing Orders

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, yesterday I spoke to the issue of prorogation, because we now have a historic opportunity to ensure that prorogation will never again be used improperly, and I said that the motion fails to eliminate that possibility.

I was about to close on the subject of prorogation by suggesting to the House, as I have suggested to the hon. government House leader in a paper I prepared on things we could do in our Standing Orders, the advice from Professor Hugo Cyr, L'Université du Québec à Montréal. He raised before the Special Parliamentary Committee on Electoral Reform, as did Professor Peter Russell, Professor Emeritus at the University of Toronto, additional reforms for democracy that we should consider making.

Professor Cyr's approach is this:

...to amend the Standing Orders of the House of Commons so that asking for Parliament to be prorogued or dissolved without first obtaining the approval of the House of Commons automatically results in a loss of confidence in the Prime Minister. Consequently, the Governor General would not be bound by a prime minister's advice requesting the early dissolution or prorogation of Parliament without first obtaining the approval of the House of Commons.

This is a very sensible proposal. What the government has proposed is a form of improvement, but there is nothing in the government proposal that would stop the abuse of power such as we saw when Stephen Harper shut down of Parliament to avoid a vote he knew he would lose. Unfortunately, the opposition parties had just recently voted on the Speech from the Throne, mistaking what they thought was a mere formality. It actually was a confidence vote and that is why the Governor General at the time refused to deny Mr. Harper his request for prorogation, although it is historically an affront to parliamentary democracy. We need to close that door now, but the proposal from the government does not do it.

Similarly, I was pleased to see the motion would deal with omnibus bills and allow them to be split, only to be crestfallen to realize they only would be allowed to be split when it came to voting on them, not for studying them. It was actually the case with one of Harper's omnibus bills, Bill C-31, which was introduced in spring 2014. I went to committee, as I was by that point mandated to do by the new motions that were passed to deny me my rights at report stage, to present amendments to various sections of the bill.

These omnibus bills were so big that when I went to committee with amendments to a section, it was the moment when members around the committee realized they had not had any witnesses on that section. It was a commercial chemical section, by the way. I wanted an amendment related to asbestos. The committee had no witnesses, had not studied it , and certainly could not take amendments, but it could pass it because it was under time allocation. When there are multiple sections pushed in the same bill, it is a small improvement to say that the Speaker can split them out for purpose of voting, but we really need those sections split out for purposes of study.

Again, the recommendation from the hon. government House leader is a small improvement but a long way from being adequate.

While we have a chance, there are a lot of things we could look at in the Standing Orders. Again, going back to the advice of Professor Peter Russell and Professor Hugo Cyr to the Special Parliamentary Committee on Electoral Reform, we are one of the only modern democracies that does not have a mandatory period between when an election takes place and when the newly elected government convenes Parliament. This loophole has not yet been exploited or abused, but there is no reason not to close the door on it now.

Fundamentally, what is terribly sad about this process is that we lost the opportunity to achieve a consensus on how to change our Standing Orders. This remains a historical, and not a good historical precedent, where the party with the majority of seats in this place, even though it does not have the majority of votes across the land, is able to push through this motion, because the votes are there.

I would urge the government House leader and the Liberals to seriously consider adopting the NDP amendment. It will do no violence to the principles it is espousing. It would at least allow omnibus bills to be split for purposes of study. I urge this to my colleagues. I also hope that in the future we can return to some of the other proposals I made, particularly taking into account the carbon footprint created by our parliamentary schedule. I continue to maintain that we need to consider very closely changing the days and the weeks in which we sit in order to intensify our time in Ottawa and thus reduce the millions of dollars and tons of greenhouse gases as we fly back and forth to this city.

[Lisa Pezzack]

The legislation is a very careful balance. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act was designed as a very careful balance between national security and charter rights and privacy. The agency has as one of its primary objectives the protection of personal information. They are subject to regular audits by the Privacy Commissioner to make sure they are keeping those commitments.

Bill C-29—Time Allocation Motion

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Speaker, I would like to use some statistics from the previous government that might be helpful. A number of years ago, on Bill C-4, which consisted of 322 pages, there were five days of debate at second reading under time allocation, two days at report stage under time allocation, and one day at third reading under time allocation.

On Bill C-31, which was 380 pages, there were five days of debate at second reading under time allocation, two days at report stage under time allocation, and two days at third reading under time allocation.

On Bill C-29, on the other hand, which was only 244 pages, there were six days of debate at second reading, there were two days at report stage, and one day at third reading.

We are doing things in a way that will allow us to get our work done. We are doing it in a way that is appropriate, so that Canadians can understand what we are trying to achieve for them and their families. That is the way we plan on moving forward to make a real difference to our economy and for Canadians over the long run.

[Daniel Therrien, Privacy Commissioner of Canada, Office of the Privacy Commissioner of Canada]

Merci, monsieur le président.

Ladies and gentlemen of the committee, thank you for inviting me to provide my views on certain aspects of the tax information exchange agreement between the Canada Revenue Agency and the IRS in the United States.

The minister explained a little about the legal framework under which this transfer is made. I do not want to repeat what she said, except to remind you that there are two important documents in this matter. We have an intergovernmental agreement, an agreement between the two governments, and we have the provisions of the Income Tax Act that were passed in 2014.

Under the IGA, the Canadian government agrees to collect certain information on accounts held by Americans in Canadian financial institutions and report that information to the United States.

This happens in two steps. First the Income Tax Act sets out requirements for Canadian financial institutions to report information with respect to those accounts to the CRA. In turn, the CRA shares this information with the IRS. The IGA is reciprocal in that the CRA also receives information from the IRS.

In previous appearances before Parliament on FATCA, my office has recognized the long-established practice of information-sharing between nations for purposes of taxation enforcement. For example, the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital, which lays the foundation to exchange information under the IGA, was signed in 1980. In more recent years, there have been international efforts by the OECD for the automatic exchange of tax information. However, we also conveyed our expectations that information-sharing activities be undertaken in a way that respects privacy rights of individuals. This holds true both for the CRA and for financial institutions

As we said in our appearance on Bill C-31, which amended the Income Tax Act, as well as in our review of the privacy impact assessment submitted to us by the CRA, we expect there to be limits to the collection, use, and disclosure of personal information, defined retention periods, and appropriate safeguards. For example, all parties involved must limit the collection of personal information to what is necessary and not collect data elements that are not required. This applies not only to the CRA, but also to reporting institutions governed by PIPEDA.

The use and disclosure of personal information must likewise be limited. The IGA specifically notes that information received under the IGA is subject to protections provided for under the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital, which limit the use and disclosure to only the collection, administration and enforcement of taxes.

With respect to retention, as we understand it, the CRA retains its records for seven years, which is consistent with CRA's retention of individual returns.

With respect to safeguards, we note that the IGA states that exchanges are subject to confidentiality and protections under the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital. The convention mentions that information received shall be treated as secret in the same manner as information obtained under the taxation laws of that state.

The CRA is expected to protect personal information from unauthorized uses and disclosures of personal information, especially considering the sensitivity of financial information and the reasonable expectation of individuals that it generally be kept confidential.

My office received a privacy impact assessment from the CRA in August 2015.

We are pleased that the CRA has adopted all our recommendations: first, reducing its retention period from 11 to seven years; second, educating financial reporting institutions to guard against the risk of over-collection; third, committing to safeguarding information, including the use of specific measures to mitigate risks identified through its threat risk assessment; fourth, updating the privacy impact assessment to reflect all proposed uses and disclosures of personal information and ensuring that these are strictly limited to purposes of tax administration.

While my office acknowledges the need to combat tax evasion, it is important for the enabling legislation to be clear in the obligations it imposes on all reporting entities, including the CRA and organizations that have FATCA reporting obligations, such as financial institutions.

For example, the IGA states that unless a reporting institution elects otherwise, accounts under certain thresholds, such as deposit accounts under $50,000—U.S., I believe, although perhaps Canadian—are not required to be reviewed, identified, or reported. However, part XVIII of the Income Tax Act seems to require reporting on all U.S. reportable accounts unless the financial institution specifically designates an account to not be a U.S. reportable account. This leads to a concern: given the apparent discretionary nature of the threshold exemptions, it may not be clear when accounts under $50,000 will be reported to the CRA.

My office has written to the CRA with follow-up questions following their response to our earlier comments of December 2015. These questions included the number of accounts under $50,000 U.S. they have received and transferred, clarification on how threshold exemptions are applied, clarification with regard to the level of review the CRA performs on records that are transferred to the IRS, and notification of how many records it received from the IRS about Canadian persons. We've also requested clarification as to why the first round of records sent to the IRS was larger than originally estimated.

In conclusion, FATCA reporting requirements are an example of co-operation among states on tax enforcement. In that respect, FATCA is neither unusual nor objectionable. That said, privacy principles have to be respected and provide balance in the implementation of the arrangement. The IGA and implementing legislation create legal effects vis-à-vis privacy law by creating an obligation to share information without the consent of the individual under the Privacy Act or PIPEDA, the private sector legislation.

There's also some lack of clarity around questions on reporting threshold exemptions. To this extent, we are again following up with the CRA. We wrote to them earlier this week on these issues as part of our privacy impact assessment review process. Protecting the privacy rights of individuals and advising on improving protections under information-sharing agreements are key parts of my mandate. Given that Parliament has chosen to pass implementing legislation to support FATCA reporting requirements, we continue to strongly recommend that these obligations not be over-broadly applied but appropriately balanced against privacy rights.

I'll be glad to take your questions.

The Environment

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I have two petitions from people in my riding.

One petition deals with the requirement to have a climate strategy. The petitioners refer back to the targets and timelines that were included in the bill that was passed in this place, Bill C-31, sponsored by the hon. member for Thunder Bay—Superior North.

[Daniel Therrien, Privacy Commissioner of Canada, Office of the Privacy Commissioner of Canada]

Thank you, Mr. Chair and members of the committee, for the invitation to address you today.

The subject of your study, Canada's regime for combatting the financing of terrorism, is clearly a timely one.

As you are aware, in light of Bill C-51 and other recent legislative activity, the past year has seen much public debate about the rules that regulate how information is collected, shared and analyzed by and among our law enforcement and intelligence agencies. Indeed, information sharing is a very important aspect of combatting crime and terrorism. It can also, however, pose risks from a privacy perspective.

Operating under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC is one agency that is a key player in information gathering and sharing, and one that my office has had many interactions with over the years.

As I outlined in my recent submission on Bill C-51, in a country governed by the rule of law, it should not be left for national security agencies to determine the limits of their powers. Generally, the law should prescribe clear and reasonable standards for the sharing, collection, use and retention of personal information, and compliance with these standards should be subject to independent and effective review mechanisms, including the courts.

In this case, the legal standards are established under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and accompanying regulations, which I find to be reasonable in their current state, as they target individuals and organizations suspected of criminal or terrorist activity or financial transactions of a significant value. This could change as a result of Bill C-51 or other measures currently under consideration that would require the sharing of all electronic transfers regardless of the amounts involved.

In terms of review, the office of the commissioner is mandated to conduct biennial reviews of FINTRAC's personal information handling safeguards, under section 72 of the enabling legislation. We also measure their activities against sections 4 to 8 of the Privacy Act, under our authority to conduct reviews as outlined in section 37 of that act.

While we know that current laws and regulations contain reasonable standards, our audits have found problems with the collection and retention of personal information in excess of these standards. We have found that some of the information shared with FINTRAC related to activities that did not demonstrate reasonable grounds to suspect money laundering or terrorist financing, and that FINTRAC was retaining data that is not relevant to its mandate. This presents an unquestionable risk to privacy by making available personal information for use and sharing that should never have been provided to FINTRAC.

To address this problem, after consulting with FINTRAC, we've prepared guidance for private sector organizations to reduce the risk of overreporting in violation of the risk to privacy. Furthermore, explicit authority under subsection 54(2) of the PCMLTFA, Proceeds of Crime (Money Laundering) and Terrorist Financing Act, as enacted by Bill C-31, was also recently granted to FINTRAC for the destruction of information that is not related to money laundering or terrorist financing. Despite these initiatives, the risk of overreporting and retention remains, and we will be paying particular attention to this issue in our upcoming two-year review.

The risks I've described will increase only if the reporting threshold for electronic funds transfers is dropped to zero, as has been discussed at this committee and elsewhere, and should Bill C-51, which further widens the potential sharing of information, be enacted without amendment.

Finally, let me say a few words about the review.

While our office is obligated to conduct compliance reviews of FINTRAC, we can only examine privacy issues. FINTRAC does not have a dedicated review body to examine their activities to ensure they are lawful, reasonable, and effective.

I conclude by reminding the committee that the lack of a dedicated review for FINTRAC was last raised by the O'Connor commission and that it remains a serious problem.

Thank you. I look forward to your questions.

[Rob Stewart, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance]

Thank you very much, Mr. Chair.

Thank you, chairman and committee members, for the opportunity to appear before this committee at its inaugural meeting to study terrorist financing.

My intention today is to give you an overview of Canada's efforts to combat terrorist financing. These efforts fall within a wider framework known as the anti-money laundering and anti-terrorist financing regime, which I will refer to as the “regime.“

I will provide you with an overview of the current threats Canada faces from terrorist financing and how this affects Canada's safety and security as well as its economy. I will next provide a summary of how Canada is engaging internationally in the fight against the financing of terrorism. Finally, drawing on the recent report from the financial action task force on the financing of the terrorist organization the Islamic State in Iraq and the Levant, or ISIL, I will outline what the international community currently understands about the financing of this organization and what we are still seeking to learn.

After Mr. Cossette and I have finished our opening remarks, we would be pleased to answer any questions you may have.

With respect to the domestic AML and ATF—anti-money laundering and anti-terrorist financing—regime, I would like to provide an overview. It is a comprehensive, horizontal initiative led by the Department of Finance that comprises 11 federal departments and agencies. The goal is to detect, deter, and facilitate the investigation and prosecuting of money laundering and terrorist financing offences, which contributes to the overall objective of protecting the integrity of Canada's financial system and the security of Canadians.

Of the 11 partners, seven receive incremental funding totalling roughly $70 million annually to support their activities. These partners are the Department of Finance, FINTRAC, the Department of Justice, the Public Prosecution Service of Canada, the Royal Canadian Mounted Police, the Canada Border Services Agency, the Canadian Security Intelligence Service, and the Canada Revenue Agency. The remaining partners contribute to the regime but do not receive dedicated funding. They include the Office of the Superintendent of Financial Institutions, Public Safety Canada, and Foreign Affairs, Trade and Development Canada.

In addition to combatting money laundering and terrorist financing, the regime complements the work of law enforcement and intelligence agencies related to serious and organized crime and national security threats. It is a key component of Canada's broad counterterrorism strategy.

The regime operates on the basis of three interdependent pillars: policy coordination, prevention, and disruption. Each regime partner plays an important role.

The first pillar is the regime's framework and coordination led by the department. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act, or PCMLTFA, is the primary piece of legislation that establishes this framework. The act requires financial institutions and intermediaries to identify their clients, keep records, and have an internal compliance program in place. The act also creates a mandatory reporting system for suspicious financial transactions, large cross-border currency transfers, and certain proscribed transactions. The legislation also established FINTRAC, and authorizes it to collect and analyze financial transaction reports and to disclose pertinent information to law enforcement and intelligence agencies.

The second pillar is the prevention of terrorist-linked funds or the proceeds of crime from entering the financial system. The onus for this deterrent approach falls to the financial institutions and intermediaries who are the gatekeepers to the financial system, and to the regulators, FINTRAC and the Office of the Superintendent of Financial Institutions, or OSFI, who ensure the compliance of these regulated businesses.

The detection and disruption of money laundering and terrorist financing represents the final pillar. In this pillar, regime partners such as CSIS, CBSA, and the RCMP, supported by FINTRAC intelligence, undertake investigations that follow the money in cases of money laundering, terrorist financing, and other financial crimes. The Canada Revenue Agency plays an important role in detecting charities that are at risk and ensuring that they are not being abused to finance terrorism.

The regime also has a robust terrorist listing process to freeze terrorist assets, pursuant to the Criminal Code and UN regulations, which is led by Public Safety Canada and Foreign Affairs respectively. In total, Canada has listed 90 terrorist entities under these two listing regimes.

Finally, the Public Prosecution Service of Canada ensures that crimes that threaten national or international security, including terrorist financing, are prosecuted to the full extent of the law.

The regime is a made-in-Canada approach to dealing with the threats of money laundering and terrorist financing, which respects the constitutional division of powers, the Charter of Rights and Freedoms, and the privacy rights of Canadians. The regime is also consistent with international standards that are developed by the Financial Action Task Force, the international anti-money laundering and counter-terrorist financing standards-setting body.

Canada's regime is regularly reviewed and enhanced to address emerging risks. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act is reviewed by Parliament every five years. The regime is also subject to a number of formal reviews and audits, including a five-year performance evaluation and a biennial privacy audit of FINTRAC from the Office of the Privacy Commissioner.

Most recently the Standing Senate Committee on Banking, Trade and Commerce issued a report of its five-year review in March 2013. The department supports the committee's goal of improving the effectiveness of the regime and many of its key recommendations, which can be broadly categorized in three themes—implementing the regime structure to increase performance, enhanced information sharing, and ensuring an appropriate scope for the regime. The government has moved forward to implement many of the recommendations.

The government announced in economic action plan 2014 that it will introduce amendments to strengthen the regime, and these amendments were introduced in budget bill C-31, which received royal assent in June 2014.

These legislative and regulatory changes will strengthen customer due diligence standards; close regime gaps; improve compliance, monitoring, and enforcement; strengthen information sharing; and give the Minister of Finance the power to issue countermeasures against jurisdictions and foreign entities that lack sufficient or have ineffective money laundering and terrorist financing controls.

The amendments also enhance the ability of FINTRAC to disclose intelligence to federal partners on threats to the security of Canada. The department is currently developing a regulatory package to support these changes.

Administratively, the regime is revisiting its performance measurement strategy, and FINTRAC has increased its feedback to reporting entities through publishing its policy interpretations online.

Also, as announced in economic action plan 2014, the government, led by Foreign Affairs, will make changes to improve the effectiveness of Canada's targeted financial sanctions regime. These changes aim to streamline the ability of the private sector to implement financial sanctions, thereby increasing their effectiveness and reducing the burden on the private sector.

I would now like to turn to assessing terrorist financing threats. To make the most effective use of resources available, Canada, like many other countries, utilizes a risk-based approach to assessing and combatting terrorist financing threats. By adopting a risk-based approach, law enforcement, intelligence agencies, and financial institutions ensure that measures to prevent or mitigate money laundering and terrorist financing are commensurate to the risks identified.

Building on existing assessment practices, the regime is in the process of completing a comprehensive whole-of-government identification and assessment of the threats and Canada's vulnerability to money laundering and terrorist financing risks. The results of this exercise, when complete, will also deliver on Canada's 2013 G-8 action plan commitment to conduct a risk assessment and align with FATF, Financial Action Task Force, recommendations.

Work done to date indicates the terrorist financing threat in Canada is not as pronounced as it is in other regions of the world, where weaker anti-terrorist financing regimes can be found and where terrorist groups have established a foothold, both in terms of operations and also in financing their activities. Although the terrorist threat to Canada posed by radicalized extremists supporting entities like ISIL is real, the terrorist financing threat appears to be lower.

Canada has taken actions against many of these identified terrorist groups through the terrorist listing process. That said, Canada is not immune to abuse by those seeking to support terrorist financing, and I expect that my colleagues from the Canada Revenue Agency, the RCMP, and CSIS will address that in their presentations to the committee.

Now, I'd like to turn to how Canada is engaging on this matter internationally. Terrorist financing is a threat that does not respect borders, and Canada's efforts to fight it are undertaken in conjunction with international partners. Canada's international counterterrorism financing initiatives are accomplished through the FATF, the G-7, the G-20, and most recently, the Counter-ISIL Finance Group.

Canada, led by the department, is a founding member of the FATF and an active participant. The FATF develops international anti–money laundering and counterterrorism financing standards, and monitors their effective implementation in the 36 members and the more than 180 countries of the global FATF network. The FATF leads international efforts related to policy development and risk analysis, and identifies and reports on emerging money laundering and terrorist financing trends and methods. This important work helps the international community stay ahead of criminals, including terrorists and their financiers, to ensure that countries have the appropriate tools in place to address them globally.

The FATF also undertakes comprehensive peer reviews that assess compliance and effectiveness of member countries' anti–money laundering and counterterrorism financing regimes against its 40 recommendations. These recommendations require all countries to have effective systems for preventing and addressing money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.

The recommendations set out the measures that countries should have in place within their criminal justice and regulatory systems, the preventative measures to be taken by financial institutions, measures to ensure corporate transparency, the establishment of competent authorities with appropriate powers and mechanisms for cooperation, and the arrangements to cooperate with other countries.

I note that Canada will be subject to an FATF mutual evaluation that will begin this fall. This assessment will review the extent to which Canada has the laws, regulations, institutions, and powers and procedures in place, and how it effectively implements them to combat money laundering and the financing of terrorists.

Canada is also participating in international efforts to counter terrorist financing through global capacity building. Specifically, the counterterrorism capacity-building program, run out of Foreign Affairs, has undertaken several counterterrorism financing capacity-building projects in countries of strategic interest, in the Americas, the Middle East, and South Asia.

As a last element to my remarks, I'd like to speak to the ongoing effort to combat the financing of ISIL. In addition to the core business of the FATF, Canada is actively engaged in the new work of the FATF on counter-ISIL financing, which is being undertaken in response to a call made this February by G-20 finance ministers. Last month, the FATF published a report drafted by experts in a number of countries, including Canada, summarizing the most significant revenue sources of ISIL, and highlighting a number of new and existing measures to disrupt its financing.

Specifically, the paper finds that ISIL is able to to draw significant funds through its control of large swaths of territory in Iraq and Syria. Known ISIL activities include the direct sale or taxing of economic assets, such as cash, oil, agricultural goods, cultural property, and other natural resources and commodities, and the looting of banks within the territory that ISIL captures.

Other sources of funds from abroad include kidnapping for ransom, the sale of archeological goods, external private donors, including through the non-profit or charity sectors and foreign terrorist fighters.

This report also notes that the group's active presence on the Internet and social media has allowed it to generate and convert international support into tangible funds. The group is known to exploit new technologies and modern communication networks, including crowdfunding techniques, to solicit financial contributions.

As the FATF paper notes, the infrastructure and organizational needs at ISIL make ongoing funding a necessity. Coalition air strikes have been effective in limiting the ability of ISIL to efficiently exploit oil and gas resources within their spheres of control. To supplement these military activities, international efforts are currently under way to help prevent ISIL from using or benefiting from the financial and commercial sectors under its control.

However, there are still issues of ISIL funding that are not well understood. To address this knowledge gap, the FATF will continue its important work by convening counterterrorism financing experts this September to study emerging trends and methods related to terrorist financing.

The FATF will also immediately review all of its members, including Canada, on their ability to restrict terrorism-related financial flows in accordance with its 40 recommendations. The focus of this exercise will be on the proper criminalization of the terrorist financing offence and the freezing of terrorist assets, including measures required by the United Nations Security Council resolutions.

This is particularly important given that some countries have yet to adequately implement the FATF standards on terrorist financing, which creates vulnerabilities within the entire financial system. In the fight to counter terrorist financing, we are only as strong as our weakest link.

In addition to the work of the FATF, Canada is also actively engaged in the U.S.-led anti-ISIL coalition, and its recently established working group to counter ISIL financing, which held its inaugural meeting last week. This working group is currently developing an action plan to help coordinate coalition activities. Canada's participation in this counter-financing working group is part of overall government efforts to counter ISIL.

Allow me to briefly conclude. Canada is committed and very engaged, both domestically and internationally, in the fight against terrorist financing. The risk is present and evolving.

We have a strong regime and are in the process of strengthening it through new regulatory amendments. We will continue to take stock of the risks and react accordingly.

Thank you.

Bill S-7—Time Allocation Motion

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Speaker, I would like to pick up the theme the hon. member for Winnipeg North was developing, and that is the issue of process and democracy in this place. I believe that the government has invoked closure on debate through time allocation more than 90 times in this Parliament. Over four years, that works out to 22 times per year. That, for Canadians who may be watching this, says that the government, 22 times a year, approximately, tells this House that we, as parliamentarians, cannot stand up in this place and represent our constituents and contribute to the debate and discussion in this place.

The consequence of that is that amendments, necessary improvements to legislation, which are contributions from all parties in this House, particularly the opposition, are not made. That is why there have been a record number of government bills that have been ruled unconstitutional by the Supreme Court in this country, including Bill C-31, which I, in committee, warned the government would be unconstitutional. Sure enough, that was found to be the case.

In terms of making good legislation, I understand that the government has a majority, and ultimately it needs to get business done, and we, as a responsible opposition, co-operate with that. However, does the member not agree that good suggestions on this side of the House that can improve the legislation are things a responsible democratic government would want to welcome in this place, not for the good of the opposition but for the good of Canada and the good of Canadians?

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I am not questioning the basic significance of the study. However, I am really worried about the way the study will be used, given the Conservative government's priorities. And that's really unfortunate. Motions on other issues have been moved, especially on an issue of particular importance at this time. Canada is facing major challenges, including the changing oil prices and all the resulting consequences. That issue is especially urgent.

I am referring to concerns this situation entails for provincial governments, especially those of Alberta, Saskatchewan and Newfoundland and Labrador. Some Canadian families are faced with the immediate problem of job loss or the need to find employment opportunities more locally. It's really disappointing to see this issue being rejected.

As for the proposed topic, I would like to remind the members of this committee that a Senate committee has also examined the matter. Many of the recommendations submitted following that study were incorporated into omnibus Bill C-31. So some work has already been done on the topic.

What I'm really worried about is that we may potentially be taking up the committee's attention and resources to carry out a study that will probably deal with issues that have already been considered elsewhere and for which we may not have anything really new to propose.

I agree that it's important to identify the source of the money used to finance terrorist activities around the world. That said, we could have turned our attention to that matter before, as the Senate did. We could have done so in 2012 or 2013, as terrorist financing was already a known problem back then.

It seems to me that a study is always being requested in response to events and that we are lagging behind instead of anticipating those events. As for the proposal and the insistence of Conservative Party members, I think it's really deplorable that they want to do this now.

Canada Revenue Agency

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Mr. Speaker, before Bill C-31, CRA officials were inexplicably prohibited from passing along evidence of serious criminal activity, uncovered on the job, to relevant law enforcement agencies. Clearly, this was and is unacceptable.

Can the Minister of National Revenue today please explain to this House why this change was necessary and how it is consistent with our government's commitment to protecting Canadians?

Economic Action Plan 2014 Act, No. 2

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

Mr. Speaker, as I rise to speak to the government's budget implementation act at third reading, I regret that we are debating, yet again, another massive omnibus piece of legislation.

This legislation contains many specific flaws, but I would like to start by addressing its conceptual failure. It covers too many subjects which are non-budgetary in nature and therefore not suitable for inclusion in a budget implementation act.

This legislation is frankly a smokescreen designed to ram through a multitude of changes without allowing for careful scrutiny and rigorous analysis. It is 460 pages long, with 400 separate clauses amending countless different laws. Bill C-43 represents a continued abuse of power, disrespect for Parliament, and plain bad judgment on the part of the government.

I would like to review a few of the specific laws in this legislation.

First, there is the small-business job credit. The Minister of Finance conceded, in his appearance before the finance committee, that his department did absolutely no economic analysis of this measure before allocating more than half a billion tax dollars to it.

At the Standing Committee on Finance, we heard from experts who say that this tax credit has a serious design flaw. It creates a perverse incentive for employers to lay off workers or reduce their hours of work in order to qualify for the tax savings.

The Parliamentary Budget Officer told us that this so-called job credit would create only 800 jobs over two years, at a cost of about $700,000 per job. Obviously, it is outrageously expensive and ineffective as a job creation measure. We know that there are better ways to manage half a billion dollars in tax dollars and at the same time better ways to create jobs. There are other measures or potentially better-designed investments that could do more to bolster the economy and create jobs cost-effectively.

We offered a focused alternative. The Liberal plan would create a two-year EI premium holiday for businesses that create new jobs, that actually hire and add to their payrolls. This would be a true incentive for employers to do more hiring. Our proposal would fix the design flaw in the government's tax credit. It was endorsed by Canadian employer organizations, such as the CFIB, Restaurants Canada, and the Canadian Manufacturers & Exporters.

Second, I would like to address the government's latest attack on refugee claimants. Having been overruled by the courts on their previous attempt to deny claimants proper medical care, the Conservatives now wish to make it easier for provincial governments to deny them social assistance. It is a harsh and punitive policy that certainly should not be buried in an omnibus budget bill.

Third, there is the restructuring of the Public Health Agency of Canada. The government would demote the position of chief public health officer, a move that would carry potential risks for the health of Canadians. At the finance committee, we heard from experts about how the Public Health Agency was created in the aftermath of Canada's SARS crisis. They told us that the chief public health officer was deliberately, at that time, made a deputy head so as to have the necessary power and autonomy to work with the provinces and effect change. The omnibus bill would undo much of that good work.

This omnibus bill also attempts to clean up the mess and correct some of the errors contained in previous Conservative omnibus bills. For example, in the last omnibus budget bill, Bill C-31, the Conservatives forgot to include a tax credit for interest on Canada apprentice loans. In the same bill, they forgot to include foreign money-service businesses as foreign entities in measures under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The Conservatives also forgot to introduce a refund for duties paid on destroyed tobacco products when they hiked these duties in Bill C-31. As well, they forgot to subject pooled registered pension plans to the same GST rules as registered pension plans in previous legislation.

There is a litany of forgetting, and it is an unfortunate result of not just a lack of competence and attention to the detail, the nitty-gritty of government or economic management, but also the design flaw of the overall approach of putting all these changes in a budget omnibus bill and denying the appropriate committees of Parliament to both review and vote on measures pertaining to their area of public policy and expertise.

In this litany of forgetting things, the government may actually be forgetting about the needs of Canadians. However, I do not think Canadians will forget about the failings of the current government come the next election.

Principal among those failings is a lack of consultation, which is clearly evident in this omnibus bill. The government did not consult with aviation groups when changing the rules around aerodromes. It did not listen to Canada's only international cable-laying company when excluding cable laying from the definition of international shipping. It did not listen to the provincial governments when pressing ahead with measures aimed at denying social assistance to refugees.

The Canadian people have made it clear that they need economic growth and employment, and they need growth and jobs to be an absolute priority for the government. Unfortunately, the government is out of touch with Canadians' needs and aspirations, and it is certainly doing nothing to create growth and prosperity.

For example, consider the government's new income-splitting scheme, which will cost $2.4 billion this year. It benefits only 14% of Canadians, the most privileged of Canadians. The measure completely overlooks single parents and parents who happen to both make similar incomes.

The late Jim Flaherty had doubts about it, and he expressed them clearly. These are the words of the late Jim Flaherty:

I think income-splitting needs a long, hard analytical look...to see who it affects and to what degree, because I’m not sure that overall, it benefits our society.

If the Conservatives followed his advice and took a long, hard look at income splitting, they would see that it does nothing to really create growth and prosperity, and does nothing to help a lot of the Canadian families that need the help the most. It also puts the government more deeply in deficit this year. The government would already project a surplus, or be close to a surplus this year, if it were not for this income-splitting scheme, which actually puts us back into a deficit situation.

While the Conservatives are borrowing to benefit a small and relatively well-off segment of the population through income splitting, they are neglecting a vulnerable group that has served Canadians with true patriotism and valour; that being our veterans.

In addition to closing Veterans Affairs offices, the government lapsed $1.1 billion that was earmarked to invest on behalf of veterans. Instead of following Parliament's direction and using those funds to take care of our veterans, the government clawed that money back for the federal treasury.

Meanwhile, the government skimped on much-needed mental health services for our veterans. In his recent report, the Auditor General found that 80% of veterans had to wait nearly eight months to find out if they were even eligible for long-term mental health services, and the other 20% had to wait even longer than that.

This is callous treatment by a government that likes to lionize the military, but will not treat individual veterans or their families with care and respect. The Conservative government is even trying to argue in the courts now that it does not have a sacred obligation to those who served in the Canadian Armed Forces.

A Liberal government would have a very different agenda than the current government, economically and socially. We believe that members of the Canadian Armed Forces and veterans should have nothing less than the best of care and support from a grateful nation and government. Our goals would be fair treatment for all members of society and the strengthening of Canada's middle class through an agenda of jobs and growth.

We would grow the economy in a way that would benefit all Canadians, investing significantly in infrastructure, innovation and trade. We would partner with the provinces and Canadian municipalities. We would work with progressive investors, including, potentially Canada's pension funds, to invest significantly and massively in infrastructure. We would follow some of the lead of countries like the U.K. and Australia. This year, Australia is investing $13 billion of federal money into infrastructure. It is leveraging with the state governments and with pension funds to create $60 billion of new investments in infrastructure.

We have the capacity, through a forward-thinking and innovative infrastructure agenda, to create jobs and growth in the short term during this time of secular stagnation and slow growth and soft employment. We can create jobs and growth in the short term, but we can also render our economy more competitive in the long term by addressing Canada's crumbling infrastructure needs.

The reality is that we probably have the best opportunity in our lifetime to actually invest in infrastructure. We have bond yields at historic lows, real interest rates actually negative, a crumbling infrastructure and soft employment market, and a slow growth economy. Put those factors together and there is little wonder why people like David Dodge, or the OECD or the IMF are saying that countries like Canada ought to be investing significantly in infrastructure.

This is no time for the government to do what it did in the last budget; that is, cut planned infrastructure spending by 89% in order to achieve a notional surplus on the eve of an election.

Infrastructure spending needs to be significant, it needs to be consistent, it needs to be long term in nature, not just around electoral scheduling.

We would invest, as a government, in getting better labour market information to provide a clear understanding of the skills mismatch to the situation of jobs without people and people without jobs, address labour shortages and, at the same time, give opportunities to young Canadians who need work.

There are 200,000 fewer jobs for young Canadians today than before the downturn. One of the things we need in Canada is better labour market data. We need to invest in organizations like Statistics Canada. We need to ensure that young Canadians and their families know more about what the jobs of today look like and what the jobs in the future will look like. We need to get better data and we need to make that data available in a user-friendly format for young Canadians, starting in junior high school, such that they can start thinking long term, not just what they want to do but what those jobs actually pay so they can get a job that will provide them with the means to have a place of their own. There has never been a time, in recent history, when we have seen more young Canadians living at home, on the sofa in the basement, because they simply cannot get work to financially sustain themselves.

One of the drivers of high levels of personal debt for Canadian families right now is the direct financial subsidization of adult children who cannot get a job or cannot get jobs that will actually financially sustain them. Canadian families today are seeing record levels of personal debt—$1.65 for every $1.00 of annual income—as parents and grandparents directly financially support young people who have skills, who have good educations, but whose skills do not match current labour market needs. We need to close that gap and part of it is simply providing good information to young Canadians as they are planning their career and their lives, and informing them as to the types of jobs, professional trades, that can provide them with the capacity to support themselves into the future.

We need to work with the provinces to restore the honour and respect paid to professional trades. We have seen a diminution in the respect for professional trades over the last 30 years. We need to reverse that because we know there is a shortage of skilled trades and an opportunity for young people, if they are given the correct information, to choose paths in skilled trades, I think we will see more young people doing that.

We also need to invest more in training and apprenticeships. We need to track unpaid internships, for instance. We have asked the government to mandate Statistics Canada to track unpaid internships. We have been told that there is more use of unpaid interns today than ever before. It is kind of a supply and demand issue.

There are a lot of young Canadians who are desperate for work, desperate for the experience they need to start off their careers, who simply cannot find work. The issue with unpaid internships is that it can deepen inequality of opportunity significantly because only children from privileged families can afford to work for no pay. In other words, it is more likely a child from a privileged family will actually get a good start and get some work experience.

This has tremendous long-term impacts on equality of opportunity. We have learned from a recent report of the IMF that in fact inequality of opportunity is not just a social issue; it impedes economic growth. That is why issues like unpaid internships and income inequality are important and why we should, at the very least, not make the situation worse with a tax change that has the capacity to deepen inequality, like income splitting.

We also need to recognize that over the last 30 years the nature of work and training has changed, not just in Canada but throughout the industrialized world. The old days where one could get a degree, or a diploma, or trade and be set for life and never have to go back to school, university or college, are over, in the same way that working for 30 years, retiring with a gold watch and defined benefit pension plan is largely behind us.

We need to update and modernize our Canada student loans program as part of a suite of support for not just young people as they graduate from high school to get their education, but as they move forward through multiple decades of their careers and lives. There is nothing really there for people in their 30s who have young families, who find that their skills do not match the current job market. It is very difficult for them to finance the education and training they need to get a job to support their families at that time. It would be good for productivity and competitiveness, and jobs and growth, if we worked with people throughout their careers and life cycles to help them get the skills they needed during that entire period.

We also believe it is important that we go back to evidence-based decision making, as opposed to the Conservatives' decision-based evidence making, when we are crafting public policy. What we may think, based on an ideological perspective, is the right thing to do, when exposed to the bright light of fact and information, we may be surprised. It is important that we get the best possible information and data, whether scientific or statistical.

We live in an age of big data. Smart companies and smart governments are investing massively in knowing more about their customers and the demographic trends and how to prepare for them. There is only one organization I can think of globally that has deliberately chosen over the last 10 years to both reduce the quality and quantity of data it collects, and that is the Conservative government. It is an ideological perspective that is wrong headed.

Instead of dividing Canadians with ideologies, a Liberal government would unite Canadians with ideas, based on fact, creativity, imagination and innovation, to create the jobs and growth that Canadians need.

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

Fine.

I think I have time for one more question.

Under votes 1b and 5b, the Canada Revenue Agency is seeking funding for the implementation of the intergovernmental agreement between Canada and the U.S. in relation to the Foreign Account Tax Compliance Act, or FATCA.

When the committee was studying the legislation setting out the agreement's implementation, Bill C-31, experts expressed concerns about the intergovernmental agreement. One of their concerns was the fact that the definition of a "financial institution" was being changed and replaced by 13 types of entities—14 with the most recent amendment contained in Bill C-43. That definition is not compatible with the intergovernmental agreement and needs to be changed.

The definition has given rise to major problems, such as the exclusion of most Canadian private trusts despite their inclusion in the intergovernmental agreement, as well as the lack of clarity around investment entities. These are some of the criticisms we heard from witnesses when the bills were under study. Some experts even said that adopting FATCA could undermine the implementation of the intergovernmental agreement.

I'd like to ask you two quick questions on the subject. First of all, have there been any discussions to incorporate changes that would clarify things, allowing for clear implementation of the legislation and regulations?