Bill C-4 (Historical)

Economic Action Plan 2013 Act No. 2

A second 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) increases the lifetime capital gains exemption to $800,000 and indexes the new limit to inflation;
(b) streamlines the process for pension plan administrators to refund a contribution made to a Registered Pension Plan as a result of a reasonable error;
(c) extends the reassessment period for reportable tax avoidance transactions and tax shelters when information returns are not filed properly and on time;
(d) phases out the federal Labour-Sponsored Venture Capital Corporations tax credit;
(e) ensures that derivative transactions cannot be used to convert fully taxable ordinary income into capital gains taxed at a lower rate;
(f) ensures that the tax consequences of disposing of a property cannot be avoided by entering into transactions that are economically equivalent to a disposition of the property;
(g) ensures that the tax attributes of trusts cannot be inappropriately transferred among arm’s length persons;
(h) responds to the Sommerer decision to restore the intended tax treatment with respect to non-resident trusts;
(i) expands eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of biogas production equipment and equipment used to treat gases from waste;
(j) imposes a penalty in instances where information on tax preparers and billing arrangements is missing, incomplete or inaccurate on Scientific Research and Experimental Development tax incentive program claim forms;
(k) phases out the accelerated capital cost allowance for capital assets used in new mines and certain mine expansions, and reduces the deduction rate for pre-production mine development expenses;
(l) adjusts the five-year phase-out of the additional deduction for credit unions;
(m) eliminates unintended tax benefits in respect of two types of leveraged life insurance arrangements;
(n) clarifies the restricted farm loss rules and increases the restricted farm loss deduction limit;
(o) enhances corporate anti-loss trading rules to address planning that avoids those rules;
(p) extends, in certain circumstances, the reassessment period for taxpayers who have failed to correctly report income from a specified foreign property on their annual income tax return;
(q) extends the application of Canada’s thin capitalization rules to Canadian resident trusts and non-resident entities; and
(r) introduces new administrative monetary penalties and criminal offences to deter the use, possession, sale and development of electronic suppression of sales software that is designed to falsify records for the purpose of tax evasion.
Part 1 also implements other selected income tax measures. Most notably, it
(a) implements measures announced on July 25, 2012, including measures that
(i) relate to the taxation of specified investment flow-through entities, real estate investment trusts and publicly-traded corporations, and
(ii) respond to the Lewin decision;
(b) implements measures announced on December 21, 2012, including measures that relate to
(i) the computation of adjusted taxable income for the purposes of the alternative minimum tax,
(ii) the prohibited investment and advantage rules for registered plans, and
(iii) the corporate reorganization rules; and
(c) clarifies that information may be provided to the Department of Employment and Social Development for a program for temporary foreign workers.
Part 2 implements certain goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 21, 2013 budget by
(a) introducing new administrative monetary penalties and criminal offences to deter the use, possession, sale and development of electronic suppression of sales software that is designed to falsify records for the purpose of tax evasion; and
(b) clarifying that the GST/HST provision, exempting supplies by a public sector body (PSB) of a property or a service if all or substantially all of the supplies of the property or service by the PSB are made for free, does not apply to supplies of paid parking.
Part 3 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 3 amends the Employment Insurance Act to extend and expand a temporary measure to refund a portion of employer premiums for small businesses. It also amends that Act to modify the Employment Insurance premium rate-setting mechanism, including setting the 2015 and 2016 rates and requiring that the rate be set on a seven-year break-even basis by the Canada Employment Insurance Commission beginning with the 2017 rate. The Division repeals the Canada Employment Insurance Financing Board Act and related provisions of other Acts. Lastly, it makes technical amendments to the Employment Insurance (Fishing) Regulations.
Division 2 of Part 3 amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to remove the prohibition against federal and provincial Crown agents and federal and provincial government employees being directors of a federally regulated financial institution. It also amends the Office of the Superintendent of Financial Institutions Act and the Financial Consumer Agency of Canada Act to remove the obligation of certain persons to give the Minister of Finance notice of their intent to borrow money from a federally regulated financial institution or from a corporation that has deposit insurance under the Canada Deposit Insurance Corporation Act.
Division 3 of Part 3 amends the Trust and Loan Companies Act, the Bank Act, the Insurance Companies Act and the Cooperative Credit Associations Act to clarify the rules for certain indirect acquisitions of foreign financial institutions.
Division 4 of Part 3 amends the Criminal Code to update the definition “passport” in subsection 57(5) and also amends the Department of Foreign Affairs, Trade and Development Act to update the reference to the Minister in paragraph 11(1)(a).
Division 5 of Part 3 amends the Canada Labour Code to amend the definition of “danger” in subsection 122(1), to modify the refusal to work process, to remove all references to health and safety officers and to confer on the Minister of Labour their powers, duties and functions. It also makes consequential amendments to the National Energy Board Act, the Hazardous Materials Information Review Act and the Non-smokers’ Health Act.
Division 6 of Part 3 amends the Department of Human Resources and Skills Development Act to change the name of the Department to the Department of Employment and Social Development and to reflect that name change in the title of that Act and of its responsible Minister. In addition, the Division amends Part 6 of that Act to extend that Minister’s powers with respect to certain Acts, programs and activities and to allow the Minister of Labour to administer or enforce electronically the Canada Labour Code. The Division also adds the title of a Minister to the Salaries Act. Finally, it makes consequential amendments to several other Acts to reflect the name change.
Division 7 of Part 3 authorizes Her Majesty in right of Canada to hold, dispose of or otherwise deal with the Dominion Coal Blocks in any manner.
Division 8 of Part 3 authorizes the amalgamation of four Crown corporations that own or operate international bridges and gives the resulting amalgamated corporation certain powers. It also makes consequential amendments and repeals certain Acts.
Division 9 of Part 3 amends the Financial Administration Act to provide that agent corporations designated by the Minister of Finance may, subject to any terms and conditions of the designation, pledge any securities or cash that they hold, or give deposits, as security for the payment or performance of obligations arising out of derivatives that they enter into or guarantee for the management of financial risks.
Division 10 of Part 3 amends the National Research Council Act to reduce the number of members of the National Research Council of Canada and to create the position of Chairperson of the Council.
Division 11 of Part 3 amends the Veterans Review and Appeal Board Act to reduce the permanent number of members of the Veterans Review and Appeal Board.
Division 12 of Part 3 amends the Canada Pension Plan Investment Board Act to allow for the appointment of up to three directors who are not residents of Canada.
Division 13 of Part 3 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to extend to the whole Act the protection for communications that are subject to solicitor-client privilege and to provide that information disclosed by the Financial Transactions and Reports Analysis Centre of Canada under subsection 65(1) of that Act may be used by a law enforcement agency referred to in that subsection only as evidence of a contravention of Part 1 of that Act.
Division 14 of Part 3 enacts the Mackenzie Gas Project Impacts Fund Act, which establishes the Mackenzie Gas Project Impacts Fund. The Division also repeals the Mackenzie Gas Project Impacts Act.
Division 15 of Part 3 amends the Conflict of Interest Act to allow the Governor in Council to designate a person or class of persons as public office holders and to designate a person who is a public office holder or a class of persons who are public office holders as reporting public office holders, for the purposes of that Act.
Division 16 of Part 3 amends the Immigration and Refugee Protection Act to establish a new regime that provides that a foreign national who wishes to apply for permanent residence as a member of a certain economic class may do so only if they have submitted an expression of interest to the Minister and have subsequently been issued an invitation to apply.
Division 17 of Part 3 modernizes the collective bargaining and recourse systems provided by the Public Service Labour Relations Act regime. It amends the dispute resolution process for collective bargaining by removing the choice of dispute resolution method and substituting conciliation, which involves the possibility of the use of a strike as the method by which the parties may resolve impasses. In those cases where 80% or more of the positions in a bargaining unit are considered necessary for providing an essential service, the dispute resolution mechanism is to be arbitration. The collective bargaining process is further streamlined through amendments to the provision dealing with essential services. The employer has the exclusive right to determine that a service is essential and the numbers of positions that will be required to provide that service. Bargaining agents are to be consulted as part of the essential services process. The collective bargaining process is also amended by extending the timeframe within which a notice to bargain collectively may be given before the expiry of a collective agreement or arbitral award.
In addition, the Division amends the factors that arbitration boards and public interest commissions must take into account when making awards or reports, respectively. It also amends the processes for the making of those awards and reports and removes the compensation analysis and research function from the mandate of the Public Service Labour Relations Board.
The Division streamlines the recourse process set out for grievances and complaints in Part 2 of the Public Service Labour Relations Act and for staffing complaints under the Public Service Employment Act.
The Division also establishes a single forum for employees to challenge decisions relating to discrimination in the public service. Grievances and complaints are to be heard by the Public Service Labour Relations Board under the grievance process set out in the Public Service Labour Relations Act. The process for the review of those grievances or complaints is to be the same as the one that currently exists under the Canadian Human Rights Act. However, grievances and complaints related specifically to staffing complaints are to be heard by the Public Service Staffing Tribunal. Grievances relating to discrimination are required to be submitted within one year or any longer period that the Public Service Labour Relations Board considers appropriate, to reflect what currently exists under the Canadian Human Rights Act.
Furthermore, the Division amends the grievance recourse process in several ways. With the sole exception of grievances relating to issues of discrimination, employees included in a bargaining unit may only present or refer an individual grievance to adjudication if they have the approval of and are represented by their bargaining agent. Also, the process as it relates to policy grievances is streamlined, including by defining more clearly an adjudicator’s remedial power when dealing with a policy grievance.
In addition, the Division provides for a clearer apportionment of the expenses of adjudication relating to the interpretation of a collective agreement. They are to be borne in equal parts by the employer and the bargaining agent. If a grievance relates to a deputy head’s direct authority, such as with respect to discipline, termination of employment or demotion, the expenses are to be borne in equal parts by the deputy head and the bargaining agent. The expenses of adjudication for employees who are not represented by a bargaining agent are to be borne by the Public Service Labour Relations Board.
Finally, the Division amends the recourse process for staffing complaints under the Public Service Employment Act by ensuring that the right to complain is triggered only in situations when more than one employee participates in an exercise to select employees that are to be laid off. And, candidates who are found not to meet the qualifications set by a deputy head may only complain with respect to their own assessment.
Division 18 of Part 3 establishes the Public Service Labour Relations and Employment Board to replace the Public Service Labour Relations Board and the Public Service Staffing Tribunal. The new Board will deal with matters that were previously dealt with by those former Boards under the Public Service Labour Relations Act and the Public Service Employment Act, respectively, which will permit proceedings under those Acts to be consolidated.
Division 19 of Part 3 adds declaratory provisions to the Supreme Court Act, respecting the criteria for appointing judges to the Supreme Court of Canada.

Report Stage

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

Mr. Speaker, since this may be the last chance I have to speak to this bill, because of time allocation, I want to correct a few things that the member for Yellowhead said. I cannot find any reference to any study anywhere that says Canada is the best country in the world in which to do business. The World Bank lists Canada as number 17 on the list of best countries in which to do business, with Singapore at the top. The most recent OECD report from November 2013 says, “The pause in the economic recovery since early 2012 has continued...”.

I want to thank the member for Kootenay—Columbia for bringing to light this very important part of Bill C-4 that should never have been in an omnibus budget bill. The Dominion Coal Blocks lands and the incredibly important ecological significance of the Flathead Valley, its potential as a national park and its connection to Waterton Glacier International Peace Park all require separate study by a committee to ensure that those ecological values are protected.

However, I thank the member. It is in his riding. He has spoken forcefully about the need to have ecological protection built into the disposition of these lands. I would ask if he would not consider a conservation covenant to run with those lands to ensure they are protected.

[David Wilks, Conservative, Kootenay—Columbia, BC]

Mr. Speaker, the member would know that in parts of the lower Flathead, including lot 82, we do have an agreement between the State of Montana, the Province of British Columbia and the federal government, with regard to ensuring that no natural resource extraction occurs in the Flathead Valley. That is already in place.

As for places to come and work, where we have a vibrant economy, the southeast corner of British Columbia is doing very well with coal extraction and metallurgical coal, and I invite anyone to come and see it someday.

The House resumed consideration of Bill C-4, A second act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures, as reported (without amendment) from the committee, and of the motions in Group No. 1.

Economic Action Plan 2013 Act No. 2

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, under the leadership of our Prime Minister, in September of this year, Moody's reaffirmed Canada's AAA credit rating.

That is because we have a Prime Minister and the best Minister of Finance in the world who keep their hands on the tiller and make sure we have one of the greatest economies on this planet. That is no accident. It is because we have a government that looks to this, and we make sure that all Canadians benefit from it.

Moody's Investors Service's report stated that Canada's AAA credit rating:

....reflects a large, diversified economy as well as sound macroeconomic policy management.

Standard and Poors has also once again confirmed our government's AAA credit rating and highlighted in its report our stable and credible policy-making and a highly resilient economy even in the face of a fragile global economy, which yet remains. However, because of our Conservative government's, our Prime Minister's and our Minister of Finance's attention to this detail, Canada remains one of the strongest economies on the planet. Its report also touted high investor confidence and, in particular, our continued openness to trade as reliable indicators of Canada's future economic success. This endorsement follows our recently announced agreement in principle on a comprehensive trade agreement with the European Union.

That trade agreement would make Canada one of only a few developed economies to have preferential access to two of the world's largest markets, the EU and the U.S., which together represent more than 800 million consumers and almost half of the global gross domestic product. I know my riding of Etobicoke Centre would benefit greatly from this trade deal because there are huge implications in it for Canada.

Our government's number one priority remains the economy, because that is the unwavering focus. More than one million more Canadians are working now than in July 2009, the best job creation record of the G7 industrialized countries.

It is my pleasure to speak to the second budget implementation bill. By implementing the measures in the economic action plan 2013, our government is helping to create jobs and opportunities for Canadians, and grow Canada's economy.

Measures in the economic action plan 2013 No. 2, aimed at spurring job creation and economic growth, include extending and expanding the hiring credit for small business, which would benefit an estimated 560,000 employers; increasing and indexing the lifetime capital gains exemption, to make investing in small business more rewarding; expanding the accelerated capital cost allowance to further encourage investments in clean energy generation; and freezing employment insurance premium rates for three years, leaving $660 million in the pockets of job creators and workers in 2014 alone.

The economic action plans will be introducing new administrative monetary penalties and criminal offences to deter the use, possession, sale and development of electronic suppression of sales software designed to falsify records for the purpose of tax evasion; closing tax loopholes relating to character conversion transactions, synthetic dispositions, leveraged life insurance arrangements and other schemes, to ensure that everyone pays their fair share; and extending, in certain circumstances, the period during which the Canada Revenue Agency can reassess a taxpayer who fails to report income from foreign property.

We do respect taxpayers' dollars. We modernized the Canada student loans program by moving to electronic service delivery, which meets our promise of eliminating red tape and unnecessary burdensome administration to get a lot of these things done. We are improving the efficiency of the temporary foreign worker program by also expanding electronic service delivery. For example, electronic signatures will suffice, whereas previously wet signatures were required, which increased the burden on people to actually get to the offices and do it. Now we have made it much easier to do all of these things online.

We are also phasing out the labour-sponsored venture capital corporations tax credit.

All these measures ensure that Canada is on the right track for economic prosperity. I think most of the world would agree with that.

I would like to further expand on a measure I just mentioned: freezing employment insurance premium rates for three years. Falling unemployment over the recovery means that the EI operating account is on track to return to balance, and the premium rate increases previously projected are simply no longer necessary.

Earlier this year, on September 9, our government announced it would freeze the employment insurance premium rate at the 2013 level of $1.88 per $100 of insurable earnings for 2014, and additionally that the rate would be set no higher than $1.88 for 2015 and 2016.

What does that mean? It means that by doing, this the government is promoting stability and predictability for employers and employees. Also, it is going to leave $660 million in the pockets of employers and workers in 2014. That means businesses and their employees, for example, in my riding of Etobicoke Centre, will keep more money in their pockets, which is great news for our local economy, especially for our small businesses, of which I have many in my riding. This measure also establishes that the premium rate for 2017 and onwards would be set according to the seven year break-even rate setting mechanism. This will ensure that EI premiums are no higher than they need to be to pay for the EI program over a seven year period.

Another measure that will help businesses in my riding is the hiring credit for small business. Small business is the engine of job creation in Canada and in recognition of the challenges faced by small businesses across the country, budget 2011 announced a temporary hiring credit for small business up to $1,000 per employer. That is significant. The credit provided needed relief to small businesses by helping defray the costs of hiring new workers and allowing them to take advantage of emerging economic activities. Indeed, the hiring credit was so successful that it was extended in 2012.

While the Canadian economy is improving, the global economy remains fragile. In order to support job creation, clause 135 would amend part IV of the Employment Insurance Act to extend and expand the hiring credit for small business in 2013. By doing this, an employer whose premiums were $15,000, increased from $10,000 used in the 2011 and 2012 hiring credit for small business, or less in 2012, would be refunded the increase in their 2013 premiums over those paid in 2012, to a maximum of $1,000. This, again, would put more money into the pockets of small businesses.

It is estimated that 560,000 small businesses will benefit from this measure, saving them $225 million in 2013. That is significant. This means that businesses and their employees, in my riding of Etobicoke Centre in particular, will be keeping more of that money. That is great news for our local economy, especially those small businesses all across Canada that will benefit from this.

Economic action plan 2013 also confirms our government's intention to create a new and innovative expression of interest immigration management system that would allow employers, provinces and territories to select skilled immigrants from a pool of applicants that best meet Canada's economic need. The expression of interest model is a new electronic, fully automated, application management system for economic immigration to Canada that would establish a two step immigrant application process, introducing the concept of the stand-alone expression of interest pre-application stage followed by an application by invitation only to the best candidates only. Candidates would complete an online form to express their interest in coming to Canada and provide information about their skills and experience, which would determine their eligibility for entry into the EOI pool. Pool submissions can be ranked, sorted, searched and top candidates would be invited to submit an application for permanent residence, which could be processed in an expedited manner.

A new expression of interest division would be added to IRPA that would allow for a stand-alone pre-application stage as a first step to immigrating to Canada under certain economic programs. In addition, the division would include broad provisions outlining the process of EOI, the required information sharing measures, as well as measures enabling a role for third parties, provinces and territories, as well as employers, under this new system. This would allow Canada to bring the best and brightest to our country, not only because we need to have sustained immigration, but also we need people who will come to our country, work closely with us, contribute to the tax base right away and make contributions to Canada within a short time of arriving.

In the past, the economic action plan has greatly benefited seniors. My riding has the eighth highest demographic of seniors in the country. These people have contributed so much to building our country and have in fact laid the foundations that all of us walk on. That is why we have done more for seniors than any other government. Budget 2011 enhanced the guaranteed income supplement, investing more than $300 million per year to improve the financial security and well-being of more than 680,000 seniors across Canada. Budget 2011 increased the budget of the new horizons for seniors program from $40 million to $45 million annually.

There are so many good things to talk about in this budget, but I will summarize by simply saying that clearly our government is on the right track. We have a Prime Minister and the best Minister of Finance in the world who have managed it deftly. They have been praised by all of their peers around the planet. We have one of the greatest economies in the G7 and we will continue to do that.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Mr. Speaker, the Conservatives usually have an ally in the Conseil du patronat when it comes to labour-sponsored venture capital funds.

However, Yves-Thomas Dorval, the president of the Conseil du patronat, has criticized the fact that the federal government does not seem to have done an impact study before making its decision. It is generally very close with the Conseil du patronat, but the government did not even talk to the Conseil before making this kind of decision.

Did the Conservatives consult anyone? If so, whom? I do not want them to tell me that they invested $1,000 for small businesses, because we suggested an investment of $2,000.

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, before any of this comes out and before any budget is released, we do extensive budget consultations. In fact, every member of Parliament, as many of my colleagues here do, should have pre-budget consultations within their ridings as well, not only with local stakeholders but organizational and business group stakeholders, chambers of commerce and many others who feed in. We take those comments and submissions and we produce them, support them and provide them to the minister for his consideration within a budget bill. That happens on a regular business. We always consult.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I want to pick up on the member's comments in regard to changes in immigration. As much as I would have welcomed the opportunity to see that come to the House in a different form, such as separate legislation, it is important for us to recognize the provincial nominee program. When I was on the immigration committee, I was a very strong advocate for trying to deal with ways in which we could look at expanding the program because of the success. Nowhere in Canada has it been more successful than in my home province of Manitoba.

Specific to that program, does the member believe provinces, such as Manitoba, that have done well with the program should be allowed to retain the number of certificates that they have been able to issue out? As the demand grows from other provinces, there seems to be a push to try to take the certificates away from the province of Manitoba.

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, I served on the immigration committee with the hon. member and he was hard working and contributed valuably to that work.

We work very closely with all provinces in their provincial nominee programs and all provinces have their specific unique needs. The minister works with his colleagues very closely and it has been one of the most successful programs in Canada for being able to allow provinces to select and choose the immigrants who they need for their local and provincial purposes.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

Mr. Speaker, there are some good things in this bill, but there are also a lot of problems.

One of the biggest problems is that it is another omnibus bill. It is impossible for the public to absorb and assess the content of this bill. It is even impossible for parliamentarians to do so, and that is our job. That is what we are elected to do.

Nevertheless, the Conservatives continue to move forward with their undemocratic ideology and introduce these massive bills.

I have a question for the member for Etobicoke Centre, who just spoke. Does he honestly think that this bill should contain a provision that takes away a pregnant woman's right to refuse work conditions that would be harmful to her baby?

[The Speaker, Andrew Scheer]

The hon. member for Etobicoke Centre has only about 30 seconds left to answer.

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, I do not know if I can address that in 30 seconds, that was pretty broad.

However, this government is the most democratic in history. As we said earlier, we have let the most number of private members' bills pass since 1972. We have had the most free open votes. We have nothing to answer to that whipped party for democracy.

As I said earlier, we have consulted with all kinds of stakeholders. We on this side have actually managed to read the budget and if those members need help, I am prepared to assist.

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

Mr. Speaker, I am pleased to take part in the debate on Bill C-4 today.

On November 7, I was at a book launch of the Right Hon. Joe Clark, the book entitled How We Lead: Canada in a Century of Change. Incidentally, I recommend reading it. That evening I met Larry Rousseau who is the Regional Executive Vice President of the Public Service Alliance of Canada.

We exchanged comments about this bill. I mentioned that Bill C-4 was explosive. It was a play on words and I am happy to see that he agreed and he picked that expression up because he used it in a text that he had published in The Huffington Post on November 23, but he also used it in a number of meetings the following week.

He told me on the Wednesday following, November 13, that he and the Public Service Alliance of Canada would be organizing a series of meetings to brief public servants in this town about the impact of Bill C-4 and that they would invite all the MPs from the area on this side of the river and the Outaouais to attend these meetings.

I attended the four meetings that were held on that Wednesday, where hundreds of public servants came to express their real concerns with the bill, which is now before us, and the contents of this omnibus legislation, specifically in terms of its far-reaching changes to the legislation that governs the federal public service and also workers that fall under federal jurisdiction through the Canada Labour Code.

The bill essentially does blow up a number of public service rights that have been acquired over the past half century, starting in the sixties when the prime minister at the time, Mr. Pearson, granted the federal public servants the lawful right to strike within “un cadre législatif très utile”. They are almost going to lose that.

In a very summary manner, I will say what Bill C-4 would do to this.

First, it would give the government the ability to define essential services in a way that was not done before. Before that, there was a mechanism where both parties, the employer and the employees, could present their arguments and the body that rendered the decision was respected. However, now this law essentially gives that authority entirely to the government.

Unions will no longer have the right to arbitration, yet it is a very important tool that has often been used to settle disputes. Now arbitration will not be an option unless 80% of the members do a job that is considered essential.

Once again, the government is giving itself the right to very easily control a union's ability to use arbitration. It is taking away the essential right to a negotiation tool that works well when the parties cannot come to an agreement.

Even if unions manage to win the right to arbitration, the government has also changed the conditions that arbitrators can use. They can only refer to the government's financial situation or recruitment and retention issues in the public service.

Everything else that could be considered before will now be taken away, including the responsibility of arbitrators to evaluate—as part of a broader, Canadian context—the situation of public servants involved in the negotiations before them. That, too, will be eliminated.

These arbitration boards will no longer be independent. Basically, they will have to report to the government. In addition, the definition of danger is changing, which will affect 200,000 public servants and 800,000 other employees in Canada.

The minister or one of his delegates will be responsible for defining danger. Those are the major changes that have been made, but there are others as well. They will set us back 50 years. Gone is the tremendous progress made regarding the rights of unionized workers in Canada's public service and the workers governed by the Canada Labour Code.

Next June, the five largest federal public service unions will see their agreement expire. What I believe is happening is that the government is outrageously and outlandishly tilting the playing field in its favour so that it can come to these negotiations and essentially adopt a take it or leave it attitude.

We have seen the government do that before. It was with the provinces on the health accord. I was party to that accord in 2004. We negotiated and signed a health accord for 10 years. As we heard today during question period, it is coming to term next year. The Government of Canada, through the Minister of Finance, has basically said that this is it; take it or leave it. It is not a healthy position in terms of relationships.

In terms of the federal government, we need a healthy relationship with our employees, and it would be very seriously affected by the provisions in Bill C-4. What are some of the consequences? We are looking at further erosion, certainly, of the rights and the morale of our public servants. We are also looking at affecting the delivery of services to the Canadian public. There is also a longer-term impact, which concerns a topic we have been bringing to the fore on a regular basis.

The initiatives in this bill will weaken unions. That is contrary to the common good and not in the public interest.

Let us not forget that, from 1950 to the 1980s, there was a phenomenon known as the Great Compression. During those years, the income gap shrank thanks in large part to unions. In 1951, 28.4% of Canadian workers were unionized. That rose to 40% in the 1980s, reaching 41.8% in 1984.

Since then, numbers have fallen and now stand at around 30%. Coincidentally, the wage and income gap within the Canadian population has grown.

We know that the middle class is now earning 5% less, while income levels of the super rich have risen astronomically.

I am sure my colleagues will love the title of this 2009 book by Paul Krugman, The Conscience of a Liberal. Paul Krugman is an economist and Nobel Prize winner, so we have to be careful how we attack him here. I will quote a passage in that book:

...everything we know about unions says that their new power [after World War II] was a major factor in the creation of a middle-class society... First, unions raise average wages for their membership; they also, indirectly and to a lesser extent, raise wages for similar workers, even if they aren't represented by unions, as nonunionized employers try to diminish the appeal of union drives to their workers. As a result unions tend to reduce the gap in earnings between blue-collar workers and higher-paid occupations, such as managers. Second, unions tend to narrow income gaps among blue-collar workers by negotiating bigger wage increases for their worst-paid members than for their best-paid members. And nonunion employers, seeking to forestall union organizers, tend to echo this effect. In other words, the known effects of unions on wages are exactly what we see in the Great Compression: a rise in the wages of blue-collar workers compared with managers and professionals, and a narrowing of wage differentials among blue-collar workers themselves.

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, I listened with great interest to my colleague's speech. I know him to be a champion of public servants in this region. We have many interests in common, including defending public servants.

It is obvious that because of its ideology, this government is predisposed to being against the state and our public servants, who are professionals.

Today we learned that this bill will lead to an increase in subcontracting. The reality is that there will be more and more subcontracting.

I am wondering if my colleague believes, as I do, that this government basically believes in privatization.

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

Mr. Speaker, I would not go so far as to say that there cannot be some subcontracting if it is shown that expertise is required or is not available within the public service.

However, when the experience and the expertise exist and the government opts for expensive subcontracting, I wonder if it is justified or if it is motivated by ideology, as my colleague mentioned. Unfortunately, I believe that that is the reason for some privatization and subcontracting. While I do not want to say that subcontracting is always a bad decision, that is all too often the case.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I enjoyed the remarks by the member for Ottawa—Vanier. He basically talked about workers' rights in Canada, especially in the public service.

We have been very fortunate in this country to have always had a reliable, non-partisan public service that was, until the last number of years, able to give advice to ministers, without fear of repercussions, in a non-partisan way. However, when I talk to people within the public service in this day and age, there is a tremendous fear. It is as if they are being attacked by ministers, by the President of the Treasury Board, and by the government itself.

There are a lot of public servants in the member's riding. I am seeing a real fear within the public service, and that has to be having an impact on morale and productivity.

I wonder if the member for Ottawa—Vanier is seeing the same thing, which is that ministries clearly do not accept advice they do not agree with. They have the right to turn it down, but instead of accepting that advice as good advice to consider, they seem to turn it around and attack the public service. I think all Canadians are the losers.