Economic Action Plan 2014 Act, No. 2

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

This bill was last introduced in the 41st Parliament, 2nd Session, which ended in August 2015.

Sponsor

Joe Oliver  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

Part 1 implements certain income tax measures proposed in the February 11, 2014 budget. Most notably, it

(a) extends the intergenerational rollover and the lifetime capital gains exemption for dispositions of property used in farming and fishing businesses;

(b) extends the tax deferral provision with respect to breeding animals to bees, and to all types of horses that are over 12 months of age, that are kept for breeding;

(c) permits income contributed to an amateur athlete trust to qualify as earned income for RRSP contribution limit purposes, with an election available to taxpayers for up to a three-year retroactive application;

(d) extends the definition “split income” to include income from a business or property that is paid or allocated to a minor child from a partnership or trust where a person related to the child is engaged in the activities of the partnership or trust to earn that income;

(e) eliminates graduated rate taxation for trusts and certain estates with an exception for cases involving testamentary trusts whose beneficiaries include individuals eligible for the Disability Tax Credit;

(f) eliminates the 60-month exemption from the non-resident trust rules;

(g) allows an individual’s estate to carry back charitable donations made as a result of the individual’s death;

(h) expands eligibility for the accelerated capital cost allowance for clean energy generation and energy conservation equipment to include water-current energy equipment and a broader range of equipment used to gasify eligible waste fuel;

(i) adjusts Canada’s foreign accrual property income rules in order to address offshore insurance swap transactions and ensure that income from the direct or indirect insurance of Canadian risks is taxed appropriately;

(j) better circumscribes the existing “investment business” definition in the foreign accrual property income regime;

(k) addresses back-to-back loan arrangements involving an intermediary; and

(l) extends the existing tax credit for interest paid on student loans to interest paid on a Canada Apprentice Loan.

Part 1 also implements other selected income tax measures. Most notably, it

(a) alleviates the tax cost to Canadian-based banks of using excess liquidity of their foreign affiliates in their Canadian operations;

(b) ensures that certain securities transactions undertaken in the course of a bank’s business of facilitating trades for arm’s length customers are not inappropriately caught by the base erosion rules;

(c) modernizes the life insurance policy exemption test;

(d) amends the foreign affiliate rules to ensure they apply appropriately to structures that include partnerships and makes generally relieving changes to certain of the base erosion rules to ensure they do not apply in unintended circumstances;

(e) amends the rules for determining the residence of international shipping corporations;

(f) provides for the appropriate taxation of taxpayers that invest in Australian trusts;

(g) amends the foreign affiliate dumping rules to ensure the rules apply in appropriate circumstances and, if applicable, provide appropriate results;

(h) excludes from the definition “non-qualifying country” in the foreign affiliate rules those countries or other jurisdictions for which the Convention on Mutual Administrative Assistance in Tax Matters is in force and effect;

(i) avoids unintended tax consequences with respect to the British Overseas Territory of the British Virgin Islands;

(j) simplifies the rules for the Canadian Film or Video Production Tax Credit regime;

(k) amends the trust loss restriction event rules to provide relief for investment trusts that meet specific conditions; and

(l) increases the maximum amount that may be claimed under the Children Fitness Tax Credit and makes the credit refundable starting in 2015.

Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures by

(a) ensuring that pooled registered pension plans are subject to similar GST/HST treatment as registered pension plans;

(b) implementing real property technical amendments that provide for the consistent treatment of different types of housing and ensure that the special valuation rule for subsidized housing works properly with the GST/HST place of supply rules and in the context of a GST/HST rate change;

(c) clarifying the application of GST/HST public service body rebates in relation to non-profit organizations that operate certain health care facilities; and

(d) relieving the GST/HST on services of refining precious metals supplied to a non-resident person that is not registered for GST/HST purposes.

Part 3 amends the Excise Act, 2001 to provide a refund of the inventory tax, introduced in the February 11, 2014 budget, on cigarettes that are destroyed or re-worked, in line with the refund of the excise duty that exists for tobacco products that are destroyed or re-worked.

Part 4 enacts and amends several Acts in order to implement various measures.

Division 1 of Part 4 amends the Industrial Design Act to make that Act consistent with the Geneva (1999) Act of the Hague Agreement Concerning the International Registration of Industrial Designs and to give the Governor in Council the authority to make regulations for carrying it into effect. The amendments include provisions relating to the contents of an application for the registration of a design, requests for priority, and the term of an exclusive right for a design.

It also amends the Patent Act to, among other things, make that Act consistent with the provisions of the Patent Law Treaty. The amendments include reducing the requirements for obtaining a filing date in relation to an application for a patent, requiring that an applicant be notified of a missed due date before an application is deemed to be abandoned, and providing that a patent may not be invalidated for non-compliance with certain requirements relating to the application on the basis of which the patent was granted.

Division 2 of Part 4 amends the Aeronautics Act to authorize the Minister of Transport to make an order, and the Governor in Council to make regulations, that prohibit the development or expansion of or any change to the operation of an aerodrome. It also amends the Act to authorize the Governor in Council to make regulations in respect of consultations by the proponents and operators of aerodromes.

Division 3 of Part 4 enacts the Canadian High Arctic Research Station Act, which establishes a new federal research organization that is to be responsible for advancing knowledge of the Canadian Arctic through scientific investigation and technology, promoting the development and dissemination of knowledge of the other circumpolar regions, strengthening Canada’s leadership on Arctic issues and ensuring a research presence in the Canadian Arctic. It also repeals the Canadian Polar Commission Act and makes consequential amendments to other Acts.

Division 4 of Part 4 amends section 207 of the Criminal Code to permit charitable or religious organizations to carry out, with the use of a computer, certain operations relating to a provincially-licensed lottery scheme.

Division 5 of Part 4 amends the Federal-Provincial Fiscal Arrangements Act to adjust the national standard for eligibility for social assistance to provide that no minimum period of residence is to be required for Canadian citizens, for permanent residents, for victims of human trafficking who hold a temporary resident permit or for protected persons.

Division 6 of Part 4 amends the Radiocommunication Act to:

(a) introduce an administrative monetary penalty regime;

(b) explicitly prohibit jammers, subject to exemptions provided by the Minister of Industry;

(c) provide for the enforcement of rules, standards and procedures established for competitive bidding systems for radio authorizations;

(d) modernize wording relating to the powers of inspectors and the requirements to obtain warrants;

(e) authorize inspectors to request information in writing and to seize non-compliant devices; and

(f) authorize the Minister of Industry to share information with domestic and foreign bodies for the purpose of regulating radiocommunication.

Division 7 of Part 4 amends the Revolving Funds Act to correct an error in the heading before section 4 by replacing the reference to the Minister of Foreign Affairs with a reference to the Minister of Citizenship and Immigration. The amendment is deemed to have come into force on July 2, 2013.

Division 8 of Part 4 amends the Royal Canadian Mint Act to eliminate the anticipation of profit by the Royal Canadian Mint with respect to the provision of goods and services to the Government of Canada.

Division 9 of Part 4 amends the Investment Canada Act to require foreign investors to provide notification whenever they acquire a Canadian business through the realization of security on a loan or other financial assistance, unless another Act applies. It also allows public disclosure of certain information related to the national security review process and makes related amendments to another Act.

Division 10 of Part 4 amends the Broadcasting Act to prohibit a person who carries on a broadcasting undertaking from charging a subscriber for providing the subscriber with a paper bill.

Division 11 of Part 4 amends the Telecommunications Act to provide the Canadian Radio-television and Telecommunications Commission (CRTC) with the authority to impose certain conditions concerning the offering and provision of services on providers of telecommunications services that are not telecommunications carriers, to prohibit providers of telecommunications services from charging subscribers for the provision of paper bills, to allow for sharing of information between the CRTC and the Competition Bureau, to provide the CRTC with the authority to impose administrative monetary penalties for violations of the Telecommunications Act, CRTC decisions and regulations, to provide the Minister of Industry with the authority to establish a registration system and update other processes relating to telecommunications apparatus in order to assess conformity with technical requirements, and to update inspection powers for ensuring compliance with that Act.

Division 12 of Part 4 amends the Business Development Bank of Canada Act to clarify the financial and management services that the Business Development Bank of Canada is authorized to provide, including financial services in respect of enterprises operating outside Canada. It also makes some changes to the governance provisions of that Act.

Division 13 of Part 4 amends the Northwest Territories Act — enacted by section 2 of chapter 2 of the Statutes of Canada, 2014 — to provide that, if the election period for the first general election under that Act would overlap with the election period for a federal general election, then the maximum duration of the first Legislative Assembly of the Northwest Territories under that Act may be extended until five years from the date fixed for the return of the writs at the last general election under the former Northwest Territories Act (chapter N-27 of the Revised Statutes of Canada).

Division 14 of Part 4 amends the Employment Insurance Act to allow for the refund of a portion of employer premiums paid by small businesses in 2015 and 2016. An employer is eligible for that refund if its premium is $15,000 or less for the year in question.

It also amends that Act to exclude from reconsideration under section 112 of that Act decisions of the Canada Employment Insurance Commission made under the Employment Insurance Regulations respecting the writing off of penalties owing, amounts payable or interest accrued on any penalties owing or amounts payable.

Division 15 of Part 4 amends the Canada-Chile Free Trade Agreement Implementation Act in order to implement amendments to the dispute resolution mechanism of the Canada-Chile Free Trade Agreement.

Division 16 of Part 4 amends the Canada Marine Act to provide for the power to make regulations with respect to undertakings that are situated in a port. It also authorizes those regulations to incorporate by reference documents, including the laws of a province. Finally, it authorizes port authorities to acquire federal real property or federal immovables and to lease or license any real property or immovable other than federal real property or federal immovables.

Division 17 of Part 4 amends the DNA Identification Act to, among other things,

(a) create new indices in the national DNA data bank that will contain DNA profiles from missing persons, from their relatives and from human remains to assist law enforcement agencies, as well as coroners, medical examiners and persons or organizations with similar duties or functions, to find missing persons and identify human remains;

(b) create a new index that will contain DNA profiles from victims of designated offences to assist law enforcement agencies in identifying persons alleged to have committed designated offences;

(c) create a new index that will contain DNA profiles derived from bodily substances that are voluntarily submitted by individuals to assist in either the investigations of missing persons or designated offences;

(d) establish criteria for adding and retaining DNA profiles in, and removing them from, the new indices, and transferring profiles between indices;

(e) specify which DNA profiles in the existing and new indices will be compared with each other;

(f) specify the purposes for which the Commissioner of the RCMP may communicate the results of comparisons of DNA profiles and the purposes for which that information may be subsequently communicated; and

(g) specify the uses to which the results of comparisons of DNA profiles may be put.

It also makes consequential amendments to the Access to Information Act and the Public Servants Disclosure Protection Act.

Division 18 of Part 4 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to provide that certain foreign entities that are engaged in the money-services business are included in the definition “foreign entity”.

Division 19 of Part 4 amends the Department of Employment and Social Development Act to eliminate the limit on the number of full-time and part-time members of the Social Security Tribunal.

Division 20 of Part 4 amends the Public Health Agency of Canada Act to create a new position of President as deputy head of the Public Health Agency of Canada, thereby separating the responsibilities of the Chief Public Health Officer from those of the deputy head of the Agency.

Division 21 of Part 4 amends the Economic Action Plan 2013 Act, No. 2 in order to provide that certain provisions of Division 8 of Part 3 of that Act apply to any corporation resulting from an amalgamation referred to in that Division, and to provide that certain provisions of the Blue Water Bridge Authority Act continue to apply to the Blue Water Bridge Authority after its continuance.

Division 22 of Part 4 amends several Acts to discontinue supervision of provincial central cooperative credit societies by the Office of the Superintendent of Financial Institutions, to eliminate tools for federal intervention in relation to those centrals and to provincial local cooperative credit societies, and to facilitate the entry of provincial cooperative credit societies into the federal credit union system by simplifying the process for continuation and amalgamation that applies to them.

Division 23 of Part 4 amends the Financial Administration Act to authorize Her Majesty in right of Canada to neither pay nor collect low-value amounts, except amounts owed by Crown corporations to persons other than Her Majesty in right of Canada, amounts payable to Crown corporations by such persons, amounts payable under the Air Travellers Security Charge Act, the Excise Act, 2001, the Excise Tax Act, the Income Tax Act or the Softwood Lumber Products Export Charge Act, 2006, and amounts related to the public debt or to interest on the public debt. It also provides Treasury Board with the authority to make regulations to set a low-value threshold, to specify circumstances for the accumulation of amounts and to exclude amounts, as well as regulations generally respecting the operation of the authority to neither pay nor collect low-value amounts.

Division 24 of Part 4 amends the Immigration and Refugee Protection Act to, among other things,

(a) replace references to an opinion provided by the Department of Employment and Social Development, with respect to an application for a work permit, with references to an “assessment”;

(b) authorize the Minister of Citizenship and Immigration or the Minister of Employment and Social Development to publish on a list the name and address of an employer who, among other things, has been convicted of certain offences; and

(c) authorize the Governor in Council to make regulations

(i) regarding the publication and removal of the names and addresses of employers,

(ii) regarding the power to require documents from any individual or entity for inspection in order to verify compliance with regulatory conditions,

(iii) requiring an employer to provide prescribed information in relation to a foreign national’s authorization to work in Canada for the employer,

(iv) governing fees to be paid for rights and privileges in relation to an assessment provided by the Department of Employment and Social Development with respect to an application for a work permit,

(v) governing fees to be paid in respect of the compliance regime that applies to employers in relation to their employment of certain foreign nationals,

(vi) regarding the collection, retention, use, disclosure and disposal of Social Insurance Numbers, and

(vii) regarding the disclosure of information for the purposes of cooperation between the Government of Canada and the government of a province.

Division 25 of Part 4 amends the Judges Act and the Federal Courts Act to implement the Government’s Response to the Report of the Special Advisor on Federal Court Prothonotaries’ Compensation with respect to the salary and benefits of the prothonotaries of the Federal Court.

Division 26 of Part 4 amends the Canadian Payments Act to make changes to the governance structure of the Canadian Payments Association and to add new obligations in respect of accountability, including by

(a) changing the composition of the Board of the Directors of the Association and the procedures for selecting the directors of the Board;

(b) establishing a Member Advisory Council;

(c) expanding the power of the Minister of Finance to issue directives to the Association; and

(d) adding new obligations in respect of the preparation of annual reports and corporate plans.

Division 27 of Part 4 amends the Payment Clearing and Settlement Act to expand and enhance the oversight powers of the Bank of Canada with respect to systems for the clearing and settlement of payment obligations and other financial transactions, so that the Bank is better able to identify risks related to financial market infrastructure and to respond in a timely and proactive manner. It also makes minor consequential amendments to other Acts.

Division 28 of Part 4 enacts the Extractive Sector Transparency Measures Act in order to impose the following obligations on entities that are engaged in the commercial development of oil, gas or minerals for the purpose of implementing Canada’s international commitments in the fight against corruption:

(a) the obligation to report to the responsible Minister certain payments made to payees; and

(b) the obligation to make reported information accessible to the public.

For the purpose of verifying compliance, the Act provides for an inspection regime and gives a power to the responsible Minister to require an entity to provide certain information. Finally, the Act provides for certain offences relating to the obligations under the Act.

Division 29 of Part 4 amends the Jobs and Economic Growth Act to provide that Canadian Nuclear Laboratories Ltd. (CNL) is an agent of Her Majesty in right of Canada, effective as of the date of CNL’s incorporation, and to provide that CNL will cease to be an agent on the day on which Atomic Energy of Canada Limited disposes of CNL’s shares. The Division also amends that Act to provide that the Public Service Superannuation Act will apply for a transitional period of three years to persons who are employees of CNL on that day.

Division 30 of Part 4 repeals a provision of the Economic Action Plan 2013 Act, No. 2 that amended a provision of the Public Service Labour Relations Act. It also amends provisions of the Economic Action Plan 2013 Act, No. 2 that amended the Public Service Employment Act in respect of the staffing complaint process.

It also makes a technical correction to a coordinating amendment in the Economic Action Plan 2013 Act, No. 2.

Division 31 of Part 4 transfers the pensionable service that is to the credit of certain Royal Canadian Mounted Police pension contributors under the Royal Canadian Mounted Police Superannuation Act to the Public Service Superannuation Act and deems those contributors to be Group 1 contributors under the Public Service Superannuation Act. It also amends the Royal Canadian Mounted Police Superannuation Act to repeal provisions relating to members of the Royal Canadian Mounted Police not holding a rank.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

Dec. 10, 2014 Passed That the Bill be now read a third time and do pass.
Dec. 10, 2014 Failed That the motion be amended by deleting all the words after the word “That” and substituting the following: “this House decline to give third reading to C-43, A Second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, because it: ( a) amends dozens of unrelated Acts without adequate parliamentary debate and oversight; ( b) fails to take meaningful action to create jobs and address weak economic growth; ( c) seeks to restrict refugee claimants’ access to social assistance, despite no demonstrated fiscal need or request from provinces for such measures; ( d) introduces patent law changes which could lead to costly litigation against the government; ( e) implements a job credit whose job impacts have not been analyzed by the government itself, and which will deplete a significant sum from the Employment Insurance fund; and ( f) breaks the government’s promises to protect small businesses from merchant fees and to ban banks from charging pay-to-pay fees.”.
Dec. 8, 2014 Passed That Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, {as amended}, be concurred in at report stage [with a further amendment/with further amendments] .
Dec. 8, 2014 Failed That Bill C-43 be amended by deleting Clause 225.
Dec. 8, 2014 Failed That Bill C-43 be amended by deleting Clause 172.
Dec. 4, 2014 Passed That, in relation to Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, not more than one further sitting day shall be allotted to the consideration at report stage of the Bill and one sitting day shall be allotted to the consideration at third reading stage of the said Bill; and That, 15 minutes before the expiry of the time provided for Government Orders on the day allotted to the consideration at report stage and on the day allotted to the consideration at third reading stage of the said Bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and in turn every question necessary for the disposal of the stage of the Bill then under consideration shall be put forthwith and successively without further debate or amendment.
Nov. 3, 2014 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.
Nov. 3, 2014 Failed That the motion be amended by deleting all the words after the word “That” and substituting the following: “this House decline to give second reading to Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, because it: ( a) amends dozens of unrelated Acts without adequate parliamentary debate and oversight; ( b) fails to address persistent unemployment and sluggish economic growth; ( c) aims to strip refugee claimants of access to social assistance to meet their basic needs; ( d) imposes a poorly designed job credit that will create few, if any, jobs while depleting Employment Insurance Funds; and ( e) breaks the government’s promises to protect small businesses from merchant fees and to ban banks from charging pay-to-pay fees.”.
Oct. 30, 2014 Passed That, in relation to Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, not more than three further sitting days shall be allotted to the consideration at second reading stage of the Bill; and That, 15 minutes before the expiry of the time provided for Government Orders on the day allotted to the consideration at second reading stage of the said Bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and, in turn, every question necessary for the disposal of the said stage of the Bill shall be put forthwith and successively, without further debate or amendment.

November 26th, 2014 / 8:05 p.m.
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Liberal

Ted Hsu Liberal Kingston and the Islands, ON

Perhaps I will make some general remarks about division 24, if that's okay, at the beginning here.

The Liberal Party generally supports the measures in division 24, except that Bill C-43, a second act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, includes some new fees to pay for this new compliance regime, and it exempts these fees from the accountability measures in the User Fees Act.

We don't think that exemption is justified. In fact, given the Conservative record, we need to strengthen accountability measures for user fees, not weaken them. Under the Conservative government, processing times for economic immigrants has gone up between 19% and 113% since 2007, depending on the different streams of federal skilled workers. We're concerned that the same thing could happen with processing times under the new temporary foreign worker regime. The government needs strong accountability measures to ensure that it provides timely service in exchange for charging the fee.

In the words of the Canadian Bar Association, “Exempting these fees from the User Fees Act invites the imposition of fees without accountability.”

November 26th, 2014 / 7:50 p.m.
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Conservative

The Chair Conservative James Rajotte

Thank you very much, Ms. May.

The ruling is as such: Bill C-43 amends the Public Health Agency of Canada Act by repealing subsection 10(2) of the act. This amendment seeks to reinstate subsection 10(2).

As House of Commons Procedure and Practice, second edition, states on page 768:

An amendment that attempts to delete an entire clause is out of order, since voting against the adoption of the clause in question would have the same effect.

As members are aware, parliamentary practice does not permit to be done indirectly what cannot be done directly. Members who do not agree with the repealing of subsection 10(2) are to vote against the clause. The amendment is therefore inadmissible

We will then move to the vote on clause 258.

Shall clause 258 carry?

(Clause 258 agreed to)

(Clauses 259 and 260 agreed to)

I want to thank Mr. Segard for being here with us this evening. I appreciate that very much.

(On clauses 261 to 265 inclusive)

Colleagues, we'll go to division 21, Economic Action Plan 2013 Act, No. 2. We have clauses 261 to 265. I do not have any amendments for these clauses. Do we want discussion on this? We'll allow the officials to come to the table.

Do you have a very brief comment, Mr. Cullen?

November 26th, 2014 / 7:25 p.m.
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Liberal

Ted Hsu Liberal Kingston and the Islands, ON

This committee has heard from experts who have told us how the Public Health Agency of Canada was created in response to Canada's experience with the SARS epidemic. These experts told us how the decision to make the chief public health officer a deputy head was a deliberate decision, so that he or she would have the necessary power and autonomy to work with the provinces to speak truth to power and effect change.

This division of Bill C-43 undoes some of that good work. It demotes the chief public health officer and reduces his or her authority, and ability to effect change. The Liberal Party believes that's a step in the wrong direction.

November 26th, 2014 / 6:45 p.m.
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Conservative

Mark Adler Conservative York Centre, ON

Thank you very much, Chair.

We need to be clear that what this amendment does would require the government to publish a report on national security reviews under the Investment Canada Act. National security, as we all know, is a very sensitive matter, and it's important that the government has discretion concerning what is disclosed. For this reason, information on national security reviews was not included as part of the requirement to publish an annual report on the administration of the act, which came into force in 2009. No amendments have been proposed in Bill C-43 to the provisions of the act related to the annual report. The amendments in Bill C-43, however, would provide the government with discretion to disclose more information about individual national security reviews.

November 26th, 2014 / 6:40 p.m.
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Conservative

The Chair Conservative James Rajotte

I call this meeting back to order, meeting number 62 of the Standing Committee on Finance, dealing with clause-by-clause consideration of Bill C-43.

(On clause 186)

Colleagues, we are at division 9, the Investment Canada Act, and we have clause 186 in front of us. There are no amendments to clause 186, so we'll go to the discussion of clause 186.

Mr. Cullen.

November 26th, 2014 / 5:05 p.m.
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Conservative

The Chair Conservative James Rajotte

I call this meeting back to order.

Colleagues, we were dealing with part 4 of Bill C-43 and we're now on division 3 dealing with the Canadian High Arctic Research Station Act. This deals with clauses 145 to 170.

We want to welcome our officials to the table for this part of the bill.

(On clause 145—Enactment)

We have four amendments under clause 145. We have Green Party-4, NDP-2, NDP-3, and Green Party-5.

Ms. May, you can speak to both of your amendments or you can speak to your amendments individually. It's up to you.

November 26th, 2014 / 5:05 p.m.
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Professor, Faculty of Law, University of Toronto, As an Individual

Prof. Kent Roach

As you've heard from Professor Forcese, and as we argued in our joint National Post piece, Parliament is being candid about the reality that some of these warrants may actually violate foreign law. It seems to me that one of the remedies for that really has to be more political and ministerial than judicial. Obviously, courts will have to grapple with this problem, but I agree with Professor Forcese, in that I think we need some ministerial oversight.

Of course, in our security environment—and this is part of the general accountability problem—it makes a lot of sense to have a whole-of-government approach to our security threat. The problem is that too often we're still remaining in silos. One of my concerns is that there might be a warrant granted under Bill C-44 that not only should the Minister of Public Safety be aware of, but that his or her cabinet colleagues in Foreign Affairs and Defence should also be aware of. I do think it's necessary for CSIS to be able to act outside of Canada, but I think the political risks of that are significant, and I think Bill C-44 could be improved by having some form of ministerial notification.

I would note that SIRC,, in its latest report, for 2013-14, has raised concerns that CSIS is not always keeping the minister informed. I agree that under a parliamentary system the responsible minister has to be aware, but I think that in the post-9/11 environment, where we have a whole-of-government approach to security, ultimately the accountability must rest at the prime ministerial level.

That was one of the reasons why, after a lot of thought and deliberation, the Air India commission recommended not what Bill C-44 is enacting, which is a privilege for CSIS, but rather a privilege for the Prime Minister's national security advisor, who the commission thought would be in the best position to determine the competing poles of promising confidentiality to get intelligence now—and that's sometimes going to be the right decision—or not promising confidentiality because we want to be able to prosecute people after. These are very difficult tensions. There's no one-size-fits-all solution.

My concern about Bill C-44 is that it may mean that CSIS makes even rational decisions at a preliminary stage of a counterterrorism investigation that could actually have repercussions and prevent us from being able to successfully prosecute extremist foreign terrorist fighters down the road.

November 26th, 2014 / 5:05 p.m.
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Professor, Faculty of Law, University of Toronto, As an Individual

Prof. Kent Roach

Well, certainly not in the United Kingdom, where there's ministerial authorization, much as is available with CSEC. In the United States, the Foreign Intelligence Surveillance Court does grant warrants. I think there are some examples of a judicial warrant and there are some examples of a ministerial warrant.

Bill C-44 has decided to opt for the judicial model. I think that's probably a wise choice.

November 26th, 2014 / 5 p.m.
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Associate Dean and Associate Professor, Department of Political Science, Royal Military College of Canada, As an Individual

Dr. Christian Leuprecht

In essence, I endorse the current amendments, however, Bill C-44 does commit one sin of omission, in my world. Many more expansive powers for security intelligence should be balanced with robust parliamentary accountability, not to be confused with oversight. My preferred model is Belgium's, where two permanent agencies headed by judges are empowered to audit not only past, but also ongoing investigations in real time and report their findings directly to a select group of security-cleared members of Parliament.

November 26th, 2014 / 4:50 p.m.
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NDP

Mathieu Ravignat NDP Pontiac, QC

Very well. I will come back with pleasure to bill C-21. Since—

November 26th, 2014 / 4:50 p.m.
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NDP

The Chair NDP Pierre-Luc Dusseault

I understand your point of view, but we need to brings things back to bill C -21.

November 26th, 2014 / 4:45 p.m.
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Liberal

Scott Brison Liberal Kings—Hants, NS

On the scope of clauses 143 and 144, we've heard from a number of Canadians who've made a case that we need stronger federal regulation around aerodromes, particularly when it comes to environmental standards around landfills, but it's clear that we need better and clearer rules regarding the development of aerodromes.

Unfortunately, this division isn't a serious attempt at strengthening the law. In fact, the Canadian Bar Association identified some problems with this. I'll quote from their brief:

The amendments to the Aeronautics Act in Bill C-43 present regulatory and legal problems concerning the exercise and scope of the Minister’s powers. The additional powers are overly broad and do not take into account the everyday operation of aerodromes. In addition, it is unclear whether the exercise of the Minister’s power to prohibit the development or expansion of an aerodrome is reviewable. ...The proposed amendments allow the Minister to get into the minutiae of the operation of the vast number of aerodromes in Canada (approximately 3500). The operation of an aerodrome changes daily, if not hourly or moment-to-moment. Providing the Minister with such power may cause administrative difficulties from a legal and regulatory perspective.

This division gives the minister sweeping powers. The government says it's doing this so that it can insist on public consultation, but the irony is that these measures were put forward without public consultation.

Finally, not that this really matters under the current regime, these measures don't belong in a budget bill and don't really belong in finance committee deliberations.

November 26th, 2014 / 4:20 p.m.
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Green

Elizabeth May Green Saanich—Gulf Islands, BC

Thank you, Mr. Chair.

As Mr. Cullen was kind enough to welcome me to committee, I remind you all that I'm here because I've been summoned. Thank you very much. I'm sure you're all glad to have at least some gender parity around the table. A bit shocking, but anyway here we go, my amendment.

As Mr. Cullen suggested, you have had x evidence from patent experts. I draw my amendment from the advice you received on November 14 from the Intellectual Property Institute of Canada. This amendment to page 305 of the omnibus bill, proposed paragraph (b), says, just to give you the context, that the subsection is deemed never to have produced its effects if:

(b) the Commissioner determines that the failure occurred in spite of the due care required by the circumstances having been taken and informs the patentee of this determination.

This is exactly as Nathan was just saying, injecting uncertainty and standards that the experts in this field believe are going to cause difficulty. As the expert evidence from the Intellectual Property Institute pointed out, Bill C-43 changes the reinstatement procedure very substantially. I quote:

In some circumstances, reinstatement is only permitted upon a determination by CIPO that the applicant's failure to take action.... The due care standard is not mandated by the PLT. It is inherently uncertain and subjective.

On that basis, I hope you'll consider this amendment favourably.

November 26th, 2014 / 3:50 p.m.
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Liberal

Scott Brison Liberal Kings—Hants, NS

Thank you, Mr. Chair.

Bill C-43 explicitly excludes cable laying from the preferential tax treatment that applies to international shipping activities. The committee heard from Canada's only international cable laying company, International Telecom. They told us that this provision in Bill C-43 is inconsistent with how other developed countries tax cable laying and would put Canadian jobs at risk.

The government, in our view, failed to make a compelling case on why cable laying should be excluded from the definition of, in this case, “international shipping”. As such, we are proposing an amendment that supports the status quo and opposes this change. This amendment both removes cable laying from the list of exceptions to international shipping, and for greater clarity explicitly includes cable laying as part of international shipping.

We prefer our amendment to the NDP amendment, as our amendment provides greater clarity that cable laying is, in fact, a recognized activity that is connected to international shipping.

November 26th, 2014 / 3:35 p.m.
See context

Wesley Wark Professor, Graduate School of Public and International Affairs, University of Ottawa, As an Individual

Thank you, Mr. Chair.

Ladies and gentlemen of the committee, it's a privilege to appear before you. I'm grateful for the opportunity. I'm the long-winded witness, so I'm going to read a condensed version of my statement.

Since the 9/11 attacks, the role of intelligence in Canadian national security policy has been revolutionized. Canadian intelligence has become more significant, more powerful, better resourced, more closely aligned with allied partners, and more globalized in terms of its operations and capabilities. As an important constituent of what is called the Canadian security and intelligence community, the Canadian Security Intelligence Service, CSIS, has undergone its share of revolutionary change since 2001. CSIS has become, de facto, a hybrid service, required to deal with an ever-expanding range of threats to national security and to operate both at home and abroad.

The issues that arise with regard to Bill C-44 reflect the fact that CSIS’ functions have changed enormously since the 9/11 attacks, and also, clearly, since the passage of the original CSIS Act itself, and have changed both in terms of the kinds of threats that CSIS must operate against and in terms of its geopolitical scope.

In my specific remarks on C-44 I intend to focus on what I think are its key provisions regarding CSIS overseas operations, including those targeting Canadians. C-44 would add clarifying language to section 12 of the act, indicating that in the performance of its security intelligence function it can operate both within and outside Canada. It further adds that Federal Court judges may issue warrants to allow CSIS to collect threat-related intelligence on Canadians abroad under its section 12 powers. C-44 also stipulates, in amendments to section 21 of the CSIS Act, that CSIS may apply for warrants to conduct section 16 operations, that is, the authorized collection of foreign intelligence within Canada.

To understand the key elements of Bill C-44 we need to put these in the context of a series of judgments made by the Federal Court with regard to CSIS extraterritorial warrant applications. This history begins in 2005 and follows a winding and complex path down to the present. There is not time in these hearings to adequately summarize this history, but let me note that the current stage was set by a ruling from the Federal Court of Appeal this past summer, which has been followed by an appeal by the Attorney General to the Supreme Court that remains pending.

In his application for leave to appeal, originally dated September 29, 2014, and unsealed in November of this year, the Attorney General summarized what was at stake as follows, “This case is about how the Canadian Security Intelligence Service (CSIS) may lawfully enlist the aid of foreign security agencies in monitoring the activities of that small number“ of Canadians who leave the country to engage in activities that threaten national security.

Whatever is ultimately decided by the courts with regard to the lawful enlistment by CSIS of foreign security agencies, there are other issues of principle and practice at stake. The most important such issue concerns sovereign control. To enlist the aid of foreign security partners, such as the Five Eyes countries, in intelligence sharing is one thing. To outsource intelligence collection to a foreign partner, no matter how close and trusted an ally, is another. Outsourcing means potential loss of control of an operation, loss of control of Canadian intelligence, and loss of control over outcomes. The Security Intelligence Review Committee commented on this matter by saying:

The risk to CSIS, then, is the ability of a Five Eyes partner to act independently on CSIS-originated information. This, in turn, carries the possible risk of detention or harm of a target based on information that originated with CSIS. SIRC found that while there are clear advantages to leveraging second-party assets

—that is, the Five Eyes countries—

in the execution of this new warrant power

—the so-called CSIS 30-08 warrants—

—and, indeed, this is essential for the process to be effective—there are also clear hazards, including the lack of control over the intelligence once it has been shared.

C-44 cements the evolution of CSIS into a hybrid agency that conducts both domestic security intelligence and foreign intelligence missions. Clarification of the legal standing of CSIS in these regards poses the danger of closing off discussion of the eventual need for a separate foreign intelligence service as a better solution to Canada’s intelligence needs, and a solution much more in keeping with the practices of our close Five Eyes partners.

More important than what C-44 does is the question of what it does not do. What it does not do is provide any sensible underlying definition of the kind of hybrid agency that CSIS has now become, and it does not provide any added controls, accountability measures, cooperative frameworks, or transparency measures around increased overseas operations by CSIS.

I want to conclude with a selection of some of the issues that I see arising from Bill C-44.

Bill C-44 applies legal band-aids to the conduct of section 12 and section 16 operations, only because we persist with a wholly artificial legacy distinction between security intelligence and foreign intelligence. CSIS officials used to make the distinction between security intelligence and foreign intelligence in terms of security intelligence being what Canada needed to have and foreign intelligence being a category of knowledge that it might be nice to have.

In a post-9/11 world, I would suggest that a distinction between foreign and security intelligence is meaningless for Canada, and the fact of its meaninglessness underscores the need for a more root-and-branch redrafting of the CSIS Act itself.

Having decided to appeal to the Supreme Court, the Federal Court of Appeal's ruling with regard to the Mosley judgment on CSIS' use of extraterritorial warrants, the legislative provisions of Bill C-44 may be rendered null or may require further amendments, depending on whether the Supreme Court agrees to hear the appeal and depending on the nature of its findings.

The Federal Court of Appeal's decision was available to the government long before Bill C-44 was tabled. Why the government decided go down two separate forks of the road, with partial amendments to the CSIS Act and with an appeal to the Supreme Court, when these two forks might well bring them to a collision at a future junction, remains a mystery to me.

Bill C-44 does not add any new provisions to the CSIS Act to ensure proper consultation between the service and its minister, the Minister of Public Safety, and the two departments most likely to be impacted by expanded CSIS overseas operations—the Department of Foreign Affairs, Trade and Development and the Department of National Defence. Both of these departments engage in their own overseas intelligence and information collection through dedicated branches.

Bill C-44 does not add any statutory requirements on the part of the CSIS director to inform the minister with regard to the undertaking of sensitive overseas intelligence collection. The most recent SIRC annual report found that CSIS needed to keep the minister more fully informed about foreign operations and section 16 investigations. SIRC, in a special study of what it calls a “sensitive CSIS activity” also urged that CSIS reporting to the minister be done in a “formal and systematic manner”.

These are indications that not all is well in terms of the relationship between the service and the minister, and that ministerial accountability for CSIS may be less rigorous than it should be.

Bill C-44 does not restore the functions of the Inspector General's office, originally established in the CSIS Act in 1984, and closed down by the government as part of an omnibus budget implementation bill in 2012. The role of the Inspector General as the “eyes and ears of the Minister” might be considered all the more critical in an age of expanding CSIS overseas operations. As the former long-serving CSIS IG, Eva Plunkett stated that the abolition of the IG function was a “huge loss” for ministerial accountability.

Bill C-44 adds no new clarifying mandate or resources for the Security Intelligence Review Committee, in keeping with the statutory provisions authorising CSIS collection under section 12 abroad.

Last but not least, Bill C-44 is silent on the issue of the need for a dedicated, security-cleared parliamentary committee to ensure the ability of Parliament to properly scrutinize the activities of CSIS and related Canadian intelligence agencies in an age of globalized operations and diverse threats to national security. Such a committee of Parliament was recently proposed by Joyce Murray in her private member's Bill C-622, and has also been proposed in the Senate Bill S-220 advanced by now-retired Senators Hugh Segal and Romeo Dallaire. And Wayne Easter of this committee earlier offered the House a similar version of proposed legislation, Bill C-551. The government continues to deny the need for such a new structure, despite all-party support for just this thing in 2005.

In conclusion, Bill C-44 in my view is a poor quality band-aid. It may also be a very temporary one, depending on a future Supreme Court ruling. It is unimaginative and it fails to address the most significant legacy issues around the CSIS Act, which is now 30 years old and was created for a different threat environment, in a different technological age, and in a different climate of democratic legitimacy.

It persists with an artificial statutory distinction between security and foreign intelligence, offers insufficient clarity about CSIS powers, and offers no new measures of transparency and accountability concomitant with the new and increased role being played by CSIS.

Thank you.