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.

Economic Action Plan 2013 Act No. 2

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I rise on the same point of order. I am not sure if the member has been here throughout my comments. If he reads what has been said, I was talking about Bill C-4. I am talking about the budget bill and it is very lengthy. I am showing how it is relevant. Bill C-4 is a huge bill and the government prorogued the session.

The members need to listen closely to what I am saying and they will find it is actually relevant.

[The Acting Speaker, Barry Devolin]

Before we go back to the hon. member so that he can continue his speech, as all members know, there is a rule of relevance in this place that hon. members are required to speak to the matter that is before the House. That is true.

As was pointed out by the hon. member for Winnipeg North, Bill C-4 touches on many areas. Therefore, there is inherently significant latitude within this discussion to talk about things that are in the bill or things that relate to things that are in the bill. On that basis, I will give the floor back to the hon. member for Winnipeg North.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I suspect that the time for the points of order will be deducted so that I will still get my full 20 minutes, because there is so much that I want to get on the record.

When we look at representing our constituents, one of the tools that I often use to allow my constituents the opportunity to have direct input here on the floor of the House of Commons is petitions. Through the petitions, members will know that I have had the opportunity to introduce a number of petitions on a wide variety of issues.

I would like to take a look at some of those petitions and how the government's budgetary decisions have had, I would say, a very poor performance in terms of priorities. Let me give a few examples. I am referring only to petitions that constituents of mine in Winnipeg North have taken the time to sign. I very much appreciate it. I will take those petitions here to the floor and provide some comment.

Example number one is one of the more popular petitions that I have. It deals with pensions and calls upon the government to recognize that people should continue to have the right to be able to retire at age 65, as opposed to the budgetary decision of the government to increase the age when one can qualify for the old age pension from 65 to 67. This is something that the government has now committed to do and that we believe is wrong.

I can tell the members opposite, and particularly the Prime Minister, that the residents of Winnipeg North believe that Canada is a wealthy enough country that we can allow people to retire at the age of 65 if that is what they choose. We have the riches available as a nation to continue that. That has been independently approved beyond a shadow of a doubt by individuals such as the Parliamentary Budget Officer.

Another very popular petition that I get back deals with the House itself. When I do my questionnaires, there is a resounding response on this issue. At a time when the government is cutting back on its civil service, what is it also doing? It is increasing the number of politicians here in Canada. I have an overwhelming majority of constituents in Winnipeg North who disagree with the government's decision to increase the size of the House of Commons. We do not need to increase the size of the House of Commons. That has been an issue on which I have received an overwhelming response from constituents, with an overwhelming majority of them saying no.

Some, including myself, would estimate the cost at $30 million or more to accommodate that increase on an annual basis, not to mention the millions that would be involved in creating those positions. My constituents would rather see the millions and millions of dollars that it would cost spent on a wide variety of other types of social programs.

We have petitions regarding crime prevention. As the government talks tough about crime and getting tough on criminal activity, what it fails to recognize is the importance of dealing with some of the causes of crime and becoming more aggressive and progressive in dealing with issues that would prevent crimes from being committed in the first place. This is something that the constituents that I represent want me to express to the Prime Minister and to the government. They want me to say that we need to start doing what we can to prevent crimes from being committed in the first place. The best way to do that is to come up with activities and programs that would prevent, for example, gang activities from growing.

We can say to young people it is better to get involved in programs such as Katimavik, even though the government has cut that program, which provided thousands of Canadians from coast to coast to coast with wonderful opportunities, and fantastic lives have followed out of those opportunities. However, we should be looking for programs and ideas that would allow our young people to say “yes, I would rather be doing that as opposed to getting engaged in gangs”.

I was at the McGregor Armoury for the Remembrance Day service and it was so encouraging to see so many young people involved in Air Cadets and other cadet programs. This again provides opportunities for young people.

I only have another minute but there are so many other issues. I could talk about the housing co-ops. I could spend at least 20 minutes just on health care. The issue is that there is so much encompassed in the bill that we could and should be talking about. The bill is going to be forced to a vote. Why? Because of time allocation. The government does not allow MPs to express themselves and that is indeed unfortunate because there is so much to talk about.

I did not even get the opportunity to say that the government inherited billions in surplus and converted it into billions in debt. I did not say anything about the billions in trade surplus, which were converted into trade deficits. The government has not done what it should be doing and that is the reason that we cannot support Bill C-4.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I listened with some interest to my friend across the way. He seemed to touch on two major aspects. One was the ongoing Senate scandal and the Prime Minister's involvement in that. If I could follow his logic, the point he was making was that the Prime Minister's Office and the government have been greatly distracted by their own ethical lapses and that distraction leads to bad legislation and bad planning around the economy and health for Canadians.

We have seen a recent report by the OECD, another one from The Economist just today, talking about the frailty of the Canadian economy and the significant foundational issues that need to be addressed.

When we look at Bill C-4, which is the topic of today's debate, this bill, which is meant to deal with supposedly the budget and finances, has all of these things crammed in, as we so often see with these omnibus bills from the Conservatives.

I would make note that the bill is, in part, introduced to fix a previous omnibus bill that was introduced to fix a previous omnibus piece of legislation. That is why we in the New Democratic Party have such opposition to the very process the government uses, because Conservatives keep introducing laws to fix old laws and doing it all under time allocation.

One of the significant frailties or concerns in the Canadian economy is the housing bubble that exists in many of our housing markets across the country; it varies. What has the government done, from my hon. friend's perspective, to address the potential, growing and concerning issue of overpricing in the housing market and of course the potential bubble bursting and affecting so many millions of Canadians?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I thank the member for the question and I will address both points. There have been ethical challenges within the Prime Minister's Office. Canadians are very much aware of those challenges and as a result of that and as a result of the Prime Minister not being transparent, accountable or fully truthful on a wide variety of different issues coming out of the Prime Minister's Office, we have been putting in a huge amount of time in terms of the agenda of the House on that issue. It has taken away from other aspects that we could be addressing. The best example of that would probably be how that issue has dominated question period. We hope that the Prime Minister will see the value in terms of testifying under oath and coming to committee.

In regard to the housing issue, the member is quite right. There is a serious housing crisis today that does need to be dealt with. One of the petitions that I introduced deals with housing co-ops. We need to start looking at ways in which we can give strength to different types of housing programs such as housing co-ops, life lease programs, renovation programs. There is so much there that we could be doing, but we find that the government's budgets have been lacking in providing this.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I would like to thank my hon. colleague for his speech in the House earlier. He brought up some very valid points in relation to the ongoing scandals that we are seeing on the other side of the House from the government and how those relate to Bill C-4.

One of the things that Bill C-4 does is change the way the government is acting when it comes to budgets. It is not so much in the sense of omnibus budget bills, because it seems to be the common practice to put in as much stuff as it can, call it a budget, and then introduce it to the House. What we see now are changes to health and safety for workers. We have seen changes to the Navigable Waters Protection Act in the previous omnibus budget bills. Then we had a prorogation of another month so that the government could come up with consumer-friendly items, but we have seen no action on these items, just a lot of talk.

I would like to ask my hon. colleague to comment on all of the talk that we hear from the other side, contrasted with the lack of action.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, there is a real need for us to look at the way in which the government has chosen to pass legislation through these budget mega-bills. It is not healthy.

I believe that what we could do here in opposition, as much as possible, is to remind our constituents and to inform all Canadians, in the best way we can, that passing legislation through the back door is not a good way to go about it.

Whenever we have a budget bill, whether it federal or provincial, there is always a need to have some bills brought through in a budget implementation bill. That has happened in the past. What makes this unique is the quantity of bills that are being brought in through this back door.

I want to add one further comment, because I realize that people are really concerned about the PMO. Let us recognize that it is the budget that allows for the PMO to exist in the first place. Maybe we should be looking at how we could be cutting back on the budget in the Prime Minister's Office until we start to get straightforward and truthful answers and possibly have representatives come before a committee to testify under oath.

[Djaouida Sellah, NDP, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, the NDP obviously opposes Bill C-4, because of both its content and the process used. I have a question for my colleague.

Over the past 35 years, under both Conservative and Liberal governments, the income of the richest 20% of Canadians has increased, while the income of the poorest 80% has decreased.

Could he speak to that?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I have had the opportunity and the good fortune to be around for a number of years. One of the things I have found is that statistics can often be used in many different types of manipulative ways. I can reflect on the reality that back in the nineties, for three or four years, the United Nations reported Canada as the best country in the world to live in, based on a wide spectrum of social factors. I take great pride in our quality of life. Many Canadians will say that we are the best country in the world to live in. I like to believe that the Liberal Party of Canada had a lot to do with that through engaging Canadians and, as a political entity, bringing ideas forward to the floor of the House of Commons.

Therefore, I give credit where credit is due. Canadians who have taken the time to get engaged and to participate in the political process have made me a proud Liberal in terms of our social programs and health care, where we had record amounts of dollars. That was because of Paul Martin and his health care accord. Programs such as our CPP and pension programs and many of the national programs we have today, if not virtually all of them, exist because of the efforts of wonderful, great Canadians getting engaged, and the Liberal Party has most frequently been the vehicle used to implement them as government policy.

When the member makes reference to some mistakes being made over the last 35 years, I suspect there have been some. However, all in all, I believe that we have done exceptionally well.

I find that at times there is a need for us to reflect on where we are. That is why I concluded my opening remarks by saying that when the Conservative government took office from Paul Martin, there was a healthy surplus. There was a surplus in terms of trade deficit, which means thousands of jobs, and there was a surplus in terms of finances, which means we had a healthier economy.

The Liberal Party, under the good, strong leadership of individuals like Pierre Elliott Trudeau, Paul Martin, and Jean Chrétien, has done exceptionally well over the years.

[Andrew Saxton, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I am very pleased today to speak at third reading to Bill C-4, an act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures. Economic action plan 2013 is crucial to Canada's long-term growth. It is a strategic plan for jobs, growth, and long-term prosperity and it builds on our government's success.

Let me begin by noting that Canada is in an enviable position among the world's industrial economies. We have fared relatively better than most in the aftermath of the global recession. Real GDP is significantly above pre-recession levels and shows the best performance in the G7. Since we introduced our economic action plan, Canada has recovered more than all the output and all of the jobs lost during the great recession. Employment has increased by over one million since July 2009. This is the strongest job growth record among G7 countries over the recovery. About 90% of all jobs created since July 2009 have been full-time positions, and more than 80% are in the private sector. This has been no easy feat, but our government continues to focus on job creation and economic growth.

I would like to point out that Canada has weathered the economic storm quite well, and the world has noticed. Both the IMF and the OECD expect Canada to be among the strongest growing economies in the G7 over the next few years. For the sixth year in a row, the World Economic Forum has rated Canada's banking system as the world's soundest. Three credit rating agencies—Moody's, Fitch, and Standard & Poor's—have reaffirmed their top ratings for Canada, and it is expected Canada will maintain its AAA rating in the year ahead.

I should point out that we are one of only a few countries that still maintain those AAA ratings.

This economic resilience reflects the actions our government took before the global crisis: lowering taxes, paying down debt by $38 billion, reducing red tape, and promoting free trade and innovation.

Of course, Canada cannot rest on this record of success. Despite solid job creation since July 2009, there are Canadians who remain unemployed. Much of our vast potential remains unfulfilled; consequently, our work is not done. We are not out of the woods yet. That is why today's legislation focuses on the drivers of growth and job creation, underpinned by our ongoing commitment to keeping taxes low and returning to balanced budgets in 2015.

Let me briefly highlight a few of the most important initiatives in the legislation before us today, all of which touch on three pillars of this legislation: closing tax loopholes and combatting tax evasion, respecting taxpayers' dollars, and providing support for job creators.

I would like to start with tax fairness, which is a significant part of today's legislation.

This issue affects all hard-working Canadians. They know that when everyone pays their fair share, it helps us keep taxes low for all Canadian families and businesses, thereby improving incentives to work, save, and invest in Canada. That is why we are taking additional action to improve the integrity of the tax system, such as further extending the application of Canada's thin capitalization rules—which limit the amount of Canadian profits that can be distributed to certain non-resident shareholders as deductible interest payments—to Canadian resident trusts and non-resident entities, and lengthening the normal reassessment period by three years for a taxpayer who has failed to report income from a specified foreign property on their annual income tax return and failed to properly file the foreign income verification statement.

It does not end there. The legislation takes further action on this front by modifying the tax treatment of certain financial arrangements, which are referred to as “character conversion transactions”. These transactions seek to reduce tax by converting the returns on an investment that would have the character of fully taxable ordinary income to capital gains, only 50% of which are included in income. Other financial arrangements, which are referred to as “synthetic dispositions”, seek to defer tax or obtain other tax benefits by allowing a taxpayer to economically dispose of a property while continuing to own it for income tax purposes.

To ensure that taxpayers cannot avoid paying their fair share by entering into these types of arrangements and transactions, Bill C-4 proposes a measure that treats these transactions as giving rise to dispositions at fair market value for income tax purposes.

As I am sure some may recognize, “synthetic dispositions” and “character conversion transactions” may not be terms we use on a regular basis, but make no mistake, these schemes have unfortunately allowed a select few to avoid paying their fair share of taxes. Today's legislation would correct this imbalance by making common sense changes we believe are necessary and timely to ensure fairness in Canada's tax system.

While we are on the subject of tax fairness, Bill C-4 also proposes to further enhance the integrity of the scientific research and experimental development tax incentive program, also knows as SR and ED. Today's legislation would introduce a penalty of $1,000 in respect of each SR and ED program claim for which the information about SR and ED tax preparers and billing arrangements are missing, incomplete or inaccurate. In addition, in the case where a third-party SR and ED tax preparer had been engaged, the SR and ED program claimant and the tax preparer would be jointly and severally liable for the penalty.

Hon. members, our government has also taken steps to enhance the neutrality of the tax system, thereby improving the allocation of investment and capital within the Canadian economy. Economic action plan 2013 contained a number of measures to improve the neutrality of the tax system, including the phase-out of certain preferences, such as the 10% corporate mineral exploration and development tax credit.

Bill C-4 builds on this success by introducing two changes that would make the tax system more neutral across mining and other industries.

First, pre-production mine development expenses, which are currently treated as Canadian exploration expenses for tax purposes, would be treated instead as Canadian development expenses. Whereas CEE is fully deductible in the year incurred, CDE would be deductible at a rate of 30% per year on a declining balance basis. To allow companies to adapt to these changes, the transition from CEE to CDE treatment would be phased in over the period of 2015 to 2017.

Second, the accelerated capital cost allowance provided for certain assets acquired for use in new mines or eligible mine expansions would be phased out over the period of 2017-20.

These two changes are consistent with similar changes announced for the oil sands sector in budget 2007 and economic action plan 2011.

Hon. members, today's legislation would improve the fairness and neutrality of the tax system while keeping taxes low for Canadian families who work hard, play by the rules and pay their taxes. Let me remind all members that it is our government that has introduced over 75 measures to improve the integrity of the tax system since 2006.

Let me now briefly touch on some of the other key measures in Bill C-4.

First I will touch on the accelerated capital cost allowance for clean energy generation equipment.

Canada is an energy superpower, with one of the world's largest resource endowments of both traditional and emerging sources of energy. Canada is increasingly looked at as a secure and dependable supplier of a wide range of energy products.

Since 2006, our government has taken significant steps to establish our country as a global clean energy leader, including through regulatory actions, investments in technology and innovation, and broad-based incentives. The government has also supported these sectors through the tax system by expanding eligibility for the ACCA for clean energy generation equipment. Through economic action plan 2012, we expanded the eligibility of the ACCA for clean energy generation equipment to include a broader range of equipment that generates or distributes energy from waste.

To further encourage businesses to invest in clean energy generation and energy-efficient equipment, today's legislation would expand eligibility by providing for more types of organic waste to be used in qualifying biogas production equipment. Specifically, eligible organic waste is expanded to include pulp and paper waste and waste water, beverage industry waste and waste water, and separated organics from municipal waste.

This legislation would also broaden the range of cleaning and upgrading equipment used to treat eligible gases from waste that is eligible for the ACCA.

These are all measures that are in line with our Conservative government's strong record of environmental protection and examples of how we are ensuring that environmental protection goes hand in hand with building a strong economic future.

Our Conservative government is also committed to keeping the employment insurance premium rate low. Bill C-4 would make good on this commitment. In September, we announced that we would freeze the EI premium rate at the 2013 level of $1.88 per $100 of insurable earnings for the year 2014. Additionally, the rate would be set no higher than $1.88 for the years 2015 and 2016.

By doing this, our Conservative government is promoting stability and predictability for both employers and employees. It would also leave an estimated $660 million in the pockets of employers and workers in the year 2014 alone. The Canadian Federation of Independent Business recently told the House finance committee that:

...85% of our members indicated that a steady and predictable EI rate is critical for small business to help keep their businesses afloat during unstable economic times, and in turn help them grow their business as the economy improves.

These are the businesses that are looking to hire Canadians and are critical to Canada's success and economic recovery.

To ensure further predictability and stability around EI premium rates, this measure would amend the Employment Insurance Act to set the EI premium rate for 2015 and 2016 at $1.88 per $100 of insurable earnings. Unlike the old Liberal government, which raided the EI fund for its own pet projects, we would ensure that EI premiums are only used for EI payments. This measure would also establish that the premium rate for 2017 and onward would be set according to the seven-year, break-even rate setting mechanism.

Make no mistake, when it comes to employment insurance, we will take no advice from the members across the way. It is a bit rich to be here to hear the Liberals and the New Democrats talk about EI rates when they supported a 45-day work year that would have seen EI premiums increase by at least 35%. Thankfully, the members on this side of the House had the common sense to oppose such a job killing proposal.

Bill C-4 also recognizes the challenges faced by small businesses across the country. In economic action plan 2011, we announced a temporary hiring credit for small business of up to $1,000 per employer. This 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 opportunities. Indeed, the temporary hiring credit was so well received by businesses that it was extended to 2012.

While the Canadian economy is improving, the global recovery remains fragile. In order to support job creation, Bill C-4 would extend and expand the hiring credit for small businesses to 2013. By doing this, an employer whose premiums were $15,000 or less in 2012 would be refunded the increase in their 2013 premiums over those paid in 2012, to a maximum of $1,000. It is estimated that 560,000 small businesses would benefit from this measure, saving them $225 million alone in 2013. Through this initiative, we would stimulate new employment and provide better support to small businesses.

Bill C-4 would also phase out inefficient and ineffective tax credits, such as the labour-sponsored venture capital corporations tax credit. Clearly, the NDP does not realize that this credit simply is not working. The message we heard from Canadians during our consultations was loud and clear, and consistent with independent experts such as the OECD. They all said that this tax subsidy was not working to promote economic growth and create jobs.

Just listen to what the Montreal Economic Institute had to say:

All things considered, labour-sponsored funds are financial instruments that fulfill neither their economic objectives, namely to make venture capital available to help Quebec businesses, nor their financial objectives of offering a good return to contributors, their performance being interesting only by taking into account the additional tax credit.

Here is what the reputable economist, Jack Mintz, had to say:

These credits have not only been ineffective in generating more venture capital, but they have also helped finance poor projects that should have never been funded in the first place.

There is more. This is what the C.D. Howe Institute had to say:

Providing tax relief to LSIFs has been, overall, a disappointing use of taxpayer money. Such funds have been shown in multiple studies, including this one, to do a poor job of achieving public policy aims.

When will the NDP get it? These credits simply do not work. Our government understands that Canada's long-term economic competitiveness in the emerging knowledge economy needs to be driven by globally competitive, high-growth businesses that innovate and create high-quality jobs.

That is why economic action plan 2012 announced resources to support Canada's venture capital industry, including $400 million to help increase private sector investments in early stage risk capital to help recapitalize existing private sector funds with willing provinces, and to support the creation of large scale venture capital funds led by the private sector.

In summary, as I said at the outset, Bill C-4 contains many important new measures. These are measures we must take in order to respond to the needs of our time, while setting out the goals our long-term prosperity demands. Measures that find efficiencies and cost savings in government are critical to sustainability and cost-effectiveness.

Action taken to support business and industry are imperative to the economic success of Canada. We must continue to provide the steady guidance that has allowed Canada to continue on the right track to recovery.

Our government will not apologize for streamlining government, creating jobs and keeping our tax system fair, while keeping taxes low. I therefore urge all hon. members to continue to support the government in this work that is so vital to the people of Canada and their continued prosperity, and thus vote for Bill C-4 in its entirety.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Mr. Speaker, there are some things in the speech of my neighbour about which I have some questions.

I am particularly interested in the National Research Council. There are changes mentioned in Bill C-4. However, I do have other questions about the National Research Council. For example, there have been hundreds and hundreds of scientists for the National Research Council fired over the last years and the council has taken an entirely different direction without really consulting any of these scientists.

We have heard of the muzzling that is going on in federal agencies. I smell a bit of mismanagement there. I do not have confidence that the new president, Mr. McDougall, really has a handle on what he should be doing in the NRC. Could the member comment on that and does Mr. McDougall enjoy his complete confidence?

[Andrew Saxton, Conservative, North Vancouver, BC]

Mr. Speaker, the government continues to support the National Research Council. In fact, I have been to certain announcements in the last couple of weeks and shows that our government is spending unprecedented amounts of money on research and technology.

I was at Simon Fraser University just last weekend announcing funding for the VIVA, the visual analytics program, which is making great strides in analyzing new ways to form data and go through important information, which will help our country when it comes to innovation and research.

This morning I went to the innovation breakfast where Gilles Patry, the president, gave a wonderful speech about what his organization was doing for innovation and research in our country.

We will continue to support research and innovation because that is the future of our country. That is how our businesses will compete head on with businesses worldwide.

[Bob Dechert, Conservative, Parliamentary Secretary to the Minister of Justice]

Mr. Speaker, I thought my hon. colleague did a really good job of explaining why predictable EI rates were so important to businesses as they plan future hiring decisions.

He mentioned the former Liberal government and the way it raided EI funds over the years, and this absurd notion the opposition puts forward of a 45-day work year.

He also mentioned the small business hiring tax credit. I represent the city of Mississauga, which has a number of large employers, manufacturers, but it also has many small businesses especially. It is a diverse community made up of a lot of new Canadians. Many new Canadians operate those small businesses.

Could he tell us how the small business hiring tax credit could benefit those types of business and encourage them to hire new employees?

[Andrew Saxton, Conservative, North Vancouver, BC]

Mr. Speaker, I want to point out that we understand that small businesses are the backbone of this economy. They are the ones creating the bulk of the new jobs. That is why we have extended the hiring credit for small businesses. We expect over 560,000 small businesses across the country to be eligible to apply for this. Those are small businesses that could actually get up to $1,000 back next year as a result of their claims.

We expect that employment will continue to grow. In fact, we just found out that in the month of November alone, 21,600 net new jobs were created. That adds to over one million net new jobs that have been created since July 2009. It is the number one jobs growth record in the G7. It is thanks to smart policies like the hiring credit for small businesses that we are experiencing such great growth in jobs.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, first of all, let me say that even though we are pretending that we are debating the budget here, the budget has two new bills in it and all kinds of matters that are not really budget related.

I am glad my colleague across the way raised the question of employment. We have a government that is absolutely married to giving more and more power to ministers. Now we are going to have the Minister of Finance actually setting the rate for EI contributions and having the final say, instead of a board. Yet the people who pay into that EI fund are employers and workers. The government does not put any money into that fund.

Is this another ruse so that the government can keep stealing from the EI fund, as it did in the past to the tune of $57 billion?