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.

The House resumed from October 23 consideration of the motion that Bill C-4, A second act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures, and of the amendment, be read the second time and referred to a committee.

Second Reading

[The Speaker, Andrew Scheer]

The hon. member for York Centre has the floor, and he has 17 minutes left to conclude his remarks.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, as I was saying yesterday, Canada's fiscal fundamentals are strong, and they are sustainable. However, to truly understand the strength behind this performance, one has to consider the hard work that took place long before through actions our government took to pay down debt, lower taxes, reduce red tape, and promote free trade and innovation. Most importantly, our government paid down significant amounts of debt when times were good and has kept our debt-to-GDP ratio well below that of our G7 counterparts. As a result, when the recession hit, we had the fiscal room necessary to respond, unlike other nations that were forced to pile vast amounts of unaffordable new debt onto old. We kept our promises to the Canadian people.

We took action to keep taxes low for Canadian families and businesses. For example, our government cut the GST from 7% to 6% to 5%. We created tax free savings accounts, which now benefit more than eight million Canadians. We established a $5,000 tax credit for first time homebuyers. We reduced the lowest personal income tax rate and increased the basic personal exemption. We introduced income splitting for seniors and brought in arts and fitness tax credits for our children. We lowered the small business tax rate to 11%, and more.

[Some hon. members]

Oh, oh!

[The Deputy Speaker, Joe Comartin]

Order. The member is about 10 feet away from me, and I cannot hear him because of the noise in this House. If members want to carry on a conversation, leave the chamber. Take it outside.

Resuming debate.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, overall, the federal tax burden is now at its lowest level in half a century. As a result of our government's low-tax plan, in 2013 the average Canadian family now pays $3,200 less in taxes.

Our Conservative government recognizes the vital role small businesses play in the economy and in job creation. That is why we are committed to helping them grow and succeed.

We know that they have been growing. We see the results. Canada is leading the world in job creation with more than one million net new jobs created since the recession. With lower taxes, businesses can now invest in new equipment, hire more workers, and expand their operations.

Tax cuts benefit Canadians, all Canadians, including both Ontario and Quebec's manufacturing sectors. In fact, Suzanne Benoît , president of Aéro Montréal, had this to say:

By actively supporting this...sector with effective and well-designed programs, the Canadian government is helping ensure the industry's long term growth and the creation of high quality jobs for Canadians.

In Ontario, Carlos Paz-Soldan, president and CEO of the Toronto-based Tenet Computer Group, added:

This budget recognizes the strong link between the innovation needs of firms such as mine and the skills and talent of college and polytechnic students across the country.

Richard Paton is president and CEO of the Chemistry Industry Association of Canada. CIAC said that it was:

...pleased by the federal budget's focus on manufacturing, jobs and growth. Funding to encourage innovation and improve the competitiveness of Ontario's manufacturing sector was especially welcomed....

As members can see, specific actions taken by our government have enabled businesses to grow. For example, during the recession, our Conservative government extended and expanded the job-creating hiring credit for small business, which benefits an estimated 560,000 employers; increased and indexed the lifetime capital gains exemption to make investing in small business more rewarded; expanded the accelerated capital cost allowance to further encourage investments in clean energy generation; and more.

During the recession, the opposition voted against these tax relief measures. Why does the opposition continually vote against supporting Canadian businesses? Why do they not support Canadian workers? If the opposition had its way, it would have the government engage in risky spending schemes or would force a $21-billion carbon tax on Canadian consumers or would hike taxes on job creation, thereby stalling economic growth.

These ideas will not work. Indeed, time has proven over and over that the way to support economic growth is by lowering taxes. Simply put, we cannot tax our way to economic prosperity.

Economic action plan 2013 builds on our government's significant action to support small businesses since 2006, which includes reducing the small business tax rate from 12% to 11%, increasing the small business limit to half a million dollars, lowering the federal corporate income tax rate to 15% to help create jobs and economic growth for Canadian families and communities, and eliminating the corporate surtax for all corporations in 2008, which was particularly beneficial to small business corporations, as the surtax represented a larger proportion of the overall payable tax.

This also includes introducing a code of conduct for the credit and debit card industry. Indeed, our government just recently improved the code by expanding it to include mobile payments, a move welcomed by the Canadian Federation of Independent Business, which said it:

...will help make the Code even more relevant and useful to small business owners, and we applaud the government...

Overall, a typical small business now has $28,600 in savings because of our Conservative government's low-tax plan.

Having said that, our government is under no illusions that our work is finished. The global economy remains fragile, with growth in advanced economies slower than expected, and Canada is certainly not immune. That is why Canada's economic action plan actively pursues new trade investment opportunities, particularly with large, dynamic, and fast-growing economies.

Indeed, our government recently completed negotiations on a comprehensive economic and trade agreement with the European Union. This agreement alone has the potential to add more than 80,000 net new jobs in Canada. Do not take my word for it. Let us hear what others have to say.

John Manley, president and CEO of the Canadian Council of Chief Executives, agrees that:

...the [comprehensive and economic trade agreement ] will create jobs, spur investment and promote economic growth.

Unlike the opposition, we understand that the pursuit of free trade is beneficial for Canada's economy. Our government's trade agenda has already made Canada one of the most open and globally engaged economies in the world.

Since 2006, we have reached free trade agreements with nine countries and are negotiating with many more. We have also concluded foreign investment promotion and protection agreements with 16 countries and are currently in active negotiations with many others. Canada has also joined the trans-Pacific partnership negotiations and we are actively pursuing new trade and investment opportunities in large, dynamic and fast-growing economies such as China, India and Japan, reflecting our belief that freer and more open trade is a key stimulus for economic global recovery.

Unlike the opposition, we know that by growing international trade and creating additional export opportunities for Canadian businesses, we will improve the standard of living for all Canadians. Free and open trade has long been a powerful engine for Canada's economy. Canadian businesses need to access key export markets in order to take advantage of new opportunities. Economic action plan 2013 builds on these measures through targeted actions that will help our manufacturers and businesses to continue to succeed on the world stage and secure a prosperous future for all Canadians.

Our government is continuing to build on our sound economic position with the implementation of economic action plan 2013. The second budget implementation act would deliver a three-year freeze on employment insurance premium increases. This tax relief would help support Canada's continuing economic recovery and sustained business-led long-term growth. However, again, do not take my word for it, let us hear what others have to say.

Diane Brisebois, president and CEO of the Retail Council of Canada agrees:

This freeze on premiums will mean more money for employers to invest in other important areas such as employment, training and infrastructure...

Furthermore, the employment insurance freeze would enhance Canada's globally competitive business environment. The freeze would help to attract foreign investment in Canada, create jobs for Canadians and foster long-term economic growth. In fact, Dan Kelly, president of the Canadian Federation of Independent Business agrees:

—payroll taxes like EI are particularly challenging for small business...[the] announcement of an EI rate freeze is fantastic news for Canada’s entrepreneurs and their employees. This move will keep hundreds of millions of dollars in the pockets of employers and employees which can only be a positive for the Canadian economy.

Most important, freezing EI rates would have a significant impact on low-income Canadians. Joyce Reynolds, the Canadian Restaurant and Foodservices Association executive vice-president of government affairs, notes:

Payroll costs have a significant impact on overall labour costs. They are a barrier to hiring, particularly for inexperienced workers...We are pleased the government is demonstrating commitment to youth employment by holding the line on these profit-insensitive costs.

Unlike the opposition, our government understands that tax relief is important to Canadian families. I encourage members opposite to vote in favour of this important measure, which would leave more money in the hands of Canadians.

Our government remains firmly committed to supporting Canadian jobs and fostering long-term prosperity for Canadians and their families. Canada's low-tax approach continues to be a beacon to other nations around the world in a time of global economic uncertainty. Our efforts have certainly not gone unrecognized. Indeed, KPMG's “Competitive Alternatives” 2012 report concluded that Canada's total business taxes were more than 40% lower than those in the United States and confirmed that Canada had the lowest tax burden on business in the G7. Along with promoting investment in our support for free and open trade, the government continues to support the low-tax environment that is required to create jobs and economic growth.

Canada is now one of the top five destinations in the world to start a business. Colleen McMorrow of Ernst & Young remarked:

Canada has emerged as a real leader in fostering an entrepreneurial culture....Canada also offers a supportive tax and regulatory environment for entrepreneurs. All these factors are combining to really promote the growth of entrepreneurs and entrepreneurship from coast to coast.

She concluded by saying, “Canada's government has been highly supportive of entrepreneurs, providing regulatory and tax regimes that have enabled start-ups and growing companies to flourish”.

Clearly, Canada's competitive tax system plays a crucial role in supporting economic growth. These tax reductions would leave more money for the private sector to reinvest in the machinery, equipment, information, technology and other physical capital that would further boost the recent productivity gains we have seen in businesses across Canada. Most important, lower taxes would allow businesses to hire more Canadians and offer higher wages as they extend production and take on the world.

I encourage all members to support Bill C-4.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, I have some questions for my colleague from the riding to the north of me concerning this budget bill which includes not only budgetary items.

The government has included some workers health and safety things that would strip powers from health and safety officers. This was never mentioned in the budget, yet it is in the budget implementation bill. I think if the workers at the Bombardier plant in his riding were facing the same kind of action by the provincial government, they would be pounding on my colleague's door complaining about what the provincial government was doing to them, yet the Conservatives are proposing something similar that was never in the budget. Why it is there?

Why are some of the consumer protection things that the government has touted as being necessary not there? They could have been included.

Why are the Conservatives insistent on making this a time allocation bill when the opposition was prepared to agree on the amount of time it was going to have?

The government prorogued and did not spend a lot of time in the House and yet it wants to hurry this up.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, perhaps the hon. member for York South—Weston was not listening clearly to my speech.

Economic action plan 2013 has received widespread support from the business community, the Canadian Federation of Independent Business, the Canadian Council of Chief Executives as well as a variety of other business organizations that say everything we have done in this budget to create jobs is welcomed, and the proof is in the pudding.

We have created over one million net new jobs since the peak of the recession in 2009 and we continue to create jobs. We are the number one job creator in the G7. We receive praise from a variety of international organizations, from economists, from Forbes magazine. As I indicated in my speech, we are the best place to be doing business. A variety of organizations have said that from the OECD to the IMF.

What is really important is that our government is clearly focused on what matters most to Canadians, and that is jobs, growth and long-term prosperity. With that in mind, we are clearly focused on what matters the most. Like a laser beam, we are focused on the economy.

As such, I would encourage NDP and Liberal members to join us and help us create even more jobs in our great country so they can go back to their constituents at voting time and tell them they helped the Canadian government create jobs and that is what mattered most to them. They could tell their constituents they played a role in all of that.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is important for us to note that when the Prime Minister was in opposition, he was exceptionally critical of the government of the day because there was a 100-page budget implementation bill. Now that he is in the Prime Minister's chair, he has increased the size of it almost tenfold. This bill contains 400 pages. Huge pieces of legislation that are completely and absolutely irrelevant to the passage of the budget are being proposed. That is one issue.

The other issue which is equally important is the fact that the government has brought in time allocation. All of these potential pieces of legislation that should have been stand-alone bills have all been incorporated into the budget bill. The Prime Minister, more than any other prime minister in the history of Canada, then says that his government is going to put a finite amount of time on debate. The government is putting in closure to force this legislation through second reading. That prevents MPs from being able to debate the budget bill and give it due diligence, let alone all of the other things that the Conservatives are trying to bring in through the back door.

How can the member believe, in good faith, that colleagues from all sides of the House can positively contribute to all the required debate to give due diligence to Bill C-4?

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, our government remains committed to what matters most to Canadians, which is jobs, growth and long-term prosperity. We have provided a number of supports for job creators in Canada, particularly the small business sector, by extending and expanding the hiring tax credit, as I indicated in my speech, which will help 560,000 employers.

We have just closed negotiations on the CETA, which will give access to Canadian business to half a million new customers in the European market. This is the largest single free trade agreement ever negotiated on the face of the earth.

The agreement is precedent-setting because we now have access to 2.7 million public sector procurement opportunities in Europe, which is completely unprecedented. I would encourage the member from Winnipeg to take the benefits of the CETA to his constituents and the businesses in his riding and encourage them to take advantage of the wonderful economic opportunities that lay ahead in the CETA.

I understand the Liberal Party candidate in the riding of Toronto Centre running for by-election on November 25, Chrystia Freeland, one of the economic advisers to his leader, said, “I say amen to raising taxes”. That shows the difference between our party and the Liberal Party.

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

Mr. Speaker, we have come through some very difficult times over the last four or five years. We have seen the world go through a global recession. What we know right now is that although many other countries are struggling with their debt load where it is really out of control, Canada is in the best fiscal position in the G7.

Canada's net debt to GDP ratio was 34.6% in 2012, the lowest among G7 countries. Germany is only second lowest at 57.2%. What we are looking at with this budget is creating more opportunity and more jobs in our economy. With more people who are working, there are going to be more people paying taxes, allowing us to get back to our objective of a balanced budget in 2015.

Since the member in his previous life worked with many companies in Toronto, could he speak more about what these kinds of actions that we are taking will mean to these job creators in our own economy?

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, indeed, the member is absolutely right. Our government took very strong action before the recession in lowering public debt by $36 billion, which was significant. That gave us now the manoeuvrability and the cushioning to respond in a positive way during the past recession. We did so in a way that outstripped the economic performance of every other G7 country in the world.

We were able to strategically plan, and we are the only party with a plan. The Liberals and the NDP do not have a plan. The Liberal plan is non-existent and the NDP plan is just to raise taxes, including a $21 billion carbon tax. Our party remains focused on what matters most to Canadians, which is jobs, growth and long-term prosperity.

The proof is clearly seen with one million net new jobs created in the peak of the recession and we have the strongest job creation record of any country around the world. We have received accolades from international organizations, from Canadian business associations and from business leaders. It is Canadian business that creates jobs, not the Canadian government. We can create the conditions that will foster Canadian job growth, and we have done that through our economic action plan. We have a plan; the opposition does not.

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

Mr. Speaker, I attempted to get in on the debate earlier about time allocation on the bill. There were so many things said that were completely false, such as the notion that large budget omnibus bills are any part of the tradition of Parliament. They are offensive to parliamentary democracy.

The largest in all history was the one referred to earlier today by the parliamentary secretary before the current administration and that was in 2005. It was 120 pages long and it was offensive in its day. To have two budget omnibus bills in the year 2013, as we had in 2012, in all cases over 300 pages long is outrageous. To close debate on it so early is a further outrage.

Does my hon. friend not find it troubling that in the last session of Parliament, 38% of all government legislation came bound together in unrelated pieces of legislation for one vote and now these very large, unwieldy and unrelated pieces of legislation are forced into time allocation?

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, what I find offensive is that during the 1990s the Liberal government balanced the budget on the backs of Canada's most vulnerable citizens by cutting social services and cutting funding to education and health care. That is the way it balanced the budget.

The way we balance the budget is by lowering taxes and creating the conditions whereby businesses can create jobs in this country, because everybody deserves a job. Is every Canadian employed right now? No, and that is why our job is not finished. We will never say our job is finished until every Canadian who wants to work has a job and has the opportunity to have a job. That is when we can say that our job is done.

I would encourage the opposition to, rather than criticize where there is no criticism warranted, join us in our plan to create jobs and foster economic opportunity and growth in this country of Canada.

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

Mr. Speaker, I am pleased to rise in the House to discuss and debate Bill C-4, the second budget implementation bill.

This is yet another omnibus bill, which, at second reading, is again the subject of a time allocation motion. Our debate will therefore be limited, which will also be the case at the Standing Committee on Finance, of which I am a member. Indeed, we will have only two meetings to discuss a bill that is over 300 pages long and that amends a great many pieces of legislation, and not just budget-related legislation or legislation related to the nation's finances.

We strongly object to this way of proceeding, as we have from the beginning of the last session of Parliament, when the government decided to make a habit of this.

I would like to focus my remarks on one aspect in particular of Bill C-4, that is, the elimination of the tax credit for labour-sponsored venture capital funds, which was announced in budget 2013. This is an extremely crucial measure. On the one hand, the government claims that it will save $355 million over five years. On the other hand, it wanted to please private investors and decided to invest $400 million in private venture capital funds. However, the two kinds of funds are very closely related, and I will expand on that in my speech.

This measure constitutes an attack on a tool that is crucial to economic development in Quebec: labour-sponsored venture capital funds. These funds are considered a crucial tool for economic development, not only by those who benefit from them—mainly small and medium-sized businesses—but also by the Quebec business community, which objected immediately and still opposes this measure. These funds play a major role in Quebec. Eliminating this tax credit will hit Quebec particularly hard, which is why I am focusing my remarks on Quebec. In fact, 90% of the investment by labour-sponsored funds is currently in Quebec.

I will focus my remarks on the Fonds de solidarité FTQ in particular since it has been around for more than 30 years. Fondaction CSN is another very active fund in Quebec, but the Fonds de solidarité FTQ has a 30-year history of economic investment. It has benefited corporations in Quebec as well as small and medium-sized businesses. That will be the focus of my remarks.

In the last 10 years alone, the Fonds de solidarité FTQ's investments have created or maintained over half a million jobs in Quebec.

I was saying that this is related to venture capital funds too. That is extremely important. The Fonds de solidarité FTQ is currently investing not only in Quebec companies and in starting up or rescuing companies in jeopardy that have the potential to contribute significantly to Quebec's economy, but it is also investing in private venture capital funds. Currently, the Fonds de solidarité FTQ is investing in 47 different funds. Some are international funds, but they are opening offices in Quebec.

Another dozen or so are Canadian funds, including the Ontario Venture Capital Fund, which was created by the Government of Ontario in the 2000s when the Ontario tax credit was eliminated. Venture capital invested in Ontario's economy had plummeted. Ontario tried to offset that by creating this agency, and the Fonds de solidarité FTQ invested heavily in it. Obviously there are also venture capital funds in Quebec that are invested in Quebec.

There are private venture capital funds, but there are also funds of funds. The largest fund of funds in Canada at present is Teralys Capital with access to $700 million. Some $250 million of that amount was invested by the Fonds de solidarité FTQ. In total, the Fonds de solidarité FTQ has invested over $1 billion in all private venture capital funds combined in Canada.

Consequently, the measure announced in Bill C-4 by the Conservatives affects more than just the ability of labour-sponsored funds, such as the Fonds de solidarité FTQ and Fondaction, to directly invest in small and medium-sized businesses in order to help them start up and grow.

It will have a serious impact on the ability of the Fonds de solidarité and Fondaction to contribute to the success of private equity funds.

This is one of the major reasons why Canada's Venture Capital & Private Equity Association is opposed to this Conservative measure. I will say it again: it opposes this measure.

The government tried to appease them with a $400 million investment, but the association understands the negative impact this measure will have on their activities, namely using venture capital to fund businesses in Canada.

I would like to quote the president of Canada's Venture Capital & Private Equity Association:

Namely, that eliminating the credit could put regional investment at risk, as [labour-sponsored venture capital corporations] are particularly active outside the main centres of economic activity. And, [the second concern is] that these vehicles “play a structural role” in the venture industry, and are frequently co-investors. “By eliminating the federal tax credit, a critical piece of infrastructure may be stripped from the entrepreneurial and venture capital eco-system,”....

Canada's Venture Capital & Private Equity Association understands the havoc and destruction that will ensue as a result of this Conservative government measure, and it is not the only business association to oppose this measure.

The Fédération des chambres de commerce du Québec opposed the government's intention to abolish the tax credit as soon as it was announced in budget 2013.

I would like to share two quotes from Françoise Bertrand, president and CEO of the Fédération des chambres de commerce du Québec.

Before the government's announcement, she was already praising the positive impact of labour-sponsored funds, including the Fonds de solidarité FTQ.

This is what she had to say on March 1, 2013, before the government announced that it was going to abolish the credit:

They understand your business. On innovation, they’re still there. The Fonds has been involved in digital technology. It’s not easy; the banks are not there. The Fonds was really ahead of the game. One thing we should say is the extent of their interest and participation in businesses in the different regions of Quebec. They have been very active in making sure that they have not been missing any opportunity.

When the government announced in budget 2013 that it intended to abolish tax credits for labour-sponsored funds, there was an immediate reaction from the Fédération des chambres du commerce du Québec. Françoise Bertrand said:

These funds are important to the economic development of Quebec, and if the government cuts these tax credits, it will eliminate an important tool for promoting business start-ups.

Were those the only negative reactions? No. Michel Leblanc, the president and CEO of the Board of Trade of Metropolitan Montreal, denounced this measure the day after budget 2013 was tabled:

The contribution of labour-sponsored funds is invaluable for our economy. These funds make long-term investments in small and medium-sized businesses in sectors that tend to be less well served by private funds. What’s remarkable is that their investments are countercyclical, because they maintain a high level of investment during economic slowdowns. Plus, the return on investment for the federal government is amply recouped, whether in terms of tax and quasi-tax revenue or recovery time.

What does that mean? Mr. Leblanc looked at two studies. One was conducted in June 2010 by SECOR Group, which was led by Marcel Côté, who is now a mayoral candidate in Montreal.

SECOR Group analyzed the return on investment of these tax credits for the Quebec and Canadian governments.

SECOR concluded that the tax credits were very positive for both governments. On average, the governments recouped the investment they made by way of this tax credit in less than three years. This means that in less than three years, these governments earn back the revenue they lost.

A second, quite recent study was conducted after the government announced the abolition of the tax credit. This study was carried out by IREC and was revealed by the Board of Trade of Metropolitan Montreal. In Canada, for every dollar of tax credit going to savers who invest in labour-sponsored funds, the government receives in return the equivalent of $1.26 in additional tax revenue. This is a gain.

For Quebec, this measure is even more important, because for every dollar that goes to savers in tax credits, the Quebec government receives $2.05 in tax revenue. Any company with an opportunity to make a similar return would jump on it. With this measure, the Canadian government is killing the goose that lays the golden eggs. Clearly, the Conservative government does not really understand either the impact labour-sponsored funds have on the Québec economy or how they work.

The member for Beauce and Minister of State for Small Business and Tourism, and Agriculture tried to defend the decision announced in budget 2013 by saying that only 11% of the capital in the Fonds de solidarité FTQ is invested as venture capital.

That is not true. In fact, Quebec law requires both funds, the Fondaction CSN and the Fonds de solidarité FTQ, to invest at least 60% of their assets in venture capital, which means in businesses. This is unsecured venture capital. It is risky, because it is low in the creditor pecking order should the investment go bad. That is why they also call it risk capital. Currently, the Fonds de solidarité FTQ invests 67% of its assets.

When he refers to the 11%, the Minister of State for Small Business and Tourism, and Agriculture and member for Beauce is all confusion. This relates to new investment made last year. Obviously, when you invest in a business and it prospers, the FTQ can give up its shares in the business and reinvest elsewhere. There is constant turnover.

The fund’s total investment is 67% of its assets. There are businesses from which the Fonds de solidarité FTQ withdrew its funding in order to invest the 11% elsewhere.

We can therefore see to what extent the Fonds de solidarité FTQ plays a crucial role in Quebec’s economic development. It has existed for 30 years, but in the last 10 years alone, over $6.3 billion has been invested in Quebec businesses, private venture capital funds and funds of funds. Some 2,239 businesses in Quebec and Canada have benefited from this, and 80% of them have fewer than 100 employees. We can therefore see the impact on SMEs.

I suggest that my Conservative colleagues listen carefully, because they are always talking about their interest in promoting SMEs and helping them develop. The Fonds de solidarité FTQ plays a crucial role in the development of SMEs. Today in Quebec, it is estimated that 171,000 jobs have been created or maintained through the efforts of the Fonds de solidarité FTQ.

The tax credit does not go to the Fonds de solidarité FTQ; it goes to the savers who decide to invest in it. It is estimated that the immediate result of this Conservative measure will be the loss of about 20,000 jobs in Quebec alone. The measure will not create jobs; it will destroy jobs that Quebec and, by extension, Canada desperately need at this time. Labour-sponsored funds of this kind, and in particular the Fonds de solidarité FTQ, have also created funds that operate regionally. That is another crucial point.

This has extremely useful spinoffs regionally. In the Quebec City area, 70,000 savers are currently contributing to the fund and receiving the tax credit, which is an incentive to save for them and an economic development lever for the fund.

The fund has invested about $1 billion to date in the Quebec City area. In the last three years alone, this has benefited 400 businesses, and 45,000 jobs have been created or maintained in the area. In my own case, for example, 25 businesses in the Lower St. Lawrence region are receiving support from the Fonds de solidarité FTQ.

Why are these businesses especially concerned? Because the fund invests largely in the regions, where private venture capital and the banks do not dare to go.

Let us think about where we would be now if we had not had help from this fund, given the number of small and medium-sized businesses that need a hand with their economic development, particularly in the regions.

This is where the Conservative government fails to understand the real consequences of its actions. It is my impression that either in the Prime Minister’s Office or in that of the Minister of Finance, they told themselves that this was a labour-sponsored venture capital fund with connections to the union and they could score a big hit by abolishing the tax credit and returning it to the private sector, which will do things better. On the other hand, people in the private venture capital field understand the importance of such funds. They protested against the move. Is the Conservative government listening? No. It is proceeding with the measure.

I would like to talk about these funds from another angle that is extremely interesting: the saver’s angle. Savers currently benefit from a 15% tax credit on their investments in the Fonds de solidarité FTQ or the Fondaction CSN. This is a necessary and crucial incentive. The government tells itself that they will be able to reinvest elsewhere if they want to and that the Fonds de solidarité FTQ is now big enough, with its $9.6 billion in assets.

However, these funds have a specific role to play that private venture capital funds do not. Their particular mission is to invest in higher-risk areas. Their return is therefore much more uncertain. Sometimes—although this was not the case during the last economic recession—they may have a lower return because less than 30% of their assets is invested in the speculative market. Nearly 70% is invested in venture capital.

This is therefore a real deterrent to savings. Now, if savers seek higher returns, they will be much more inclined to turn to private funds such as mutual funds, venture capital funds or something else that will assure them of less uncertain, more stable and higher returns. This is why the tax credit is there in a complementary role.

I do not understand this decision by the Conservative government, which is determined to eliminate the tax credit. The Fonds de solidarité FTQ and the Fondaction CSN are two key drivers in the development of the Quebec economy. They have proven their value and they are needed. The Fédération des chambres de commerce du Québec and the Board of Trade of Metropolitan Montreal recognize the need for these development tools. The Conservative government is jeopardizing all this by eliminating the tax credit.

I would like to know why no one is taking the trouble to study this particular measure, which will have such a significant impact on the Quebec economy. The Conservatives are fond of saying that they work to ensure that they walk the talk. They should therefore conduct an impact study to assess the real effect of this measure, because it will have serious consequences.

I therefore expect to be able to discuss this measure in the Standing Committee on Finance. I hope to have informed questions from my colleagues. They should understand that this goes against the government's plan—and it is a plan, we certainly hear it often enough—for Canada's economic development.