Bill C-59 (Historical)

Economic Action Plan 2015 Act, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures

Part 1 implements income tax measures and related measures proposed or referenced in the April 21, 2015 budget. In particular, it
(a) reduces the required minimum amount that must be withdrawn annually from a registered retirement income fund, a variable benefit money purchase registered pension plan or a pooled registered pension plan;
(b) ensures that amounts received on account of the new critical injury benefit and the new family caregiver relief benefit under the Canadian Forces Members and Veterans Re-establishment and Compensation Act are exempt from income tax;
(c) decreases the small business tax rate and makes consequential adjustments to the dividend gross-up factor and dividend tax credit;
(d) increases the lifetime capital gains exemption to $1 million for qualified farm and fishing properties;
(e) introduces the home accessibility tax credit;
(f) extends, for one year, the mineral exploration tax credit for flow-through share investors;
(g) extends, for five years, the tax deferral regime that applies to patronage dividends paid to members by an eligible agricultural cooperative in the form of eligible shares;
(h) extends until the end of 2018 the temporary measure that allows certain family members to open a registered disability savings plan for an adult individual who might not be able to enter into a contract;
(i) permits certain foreign charitable foundations to be registered as qualified donees;
(j) increases the annual contribution limit for tax-free savings accounts to $10,000;
(k) creates a new quarterly remitter category for certain small new employers; and
(l) provides an accelerated capital cost allowance for investment in machinery and equipment used in manufacturing and processing.
Part 2 implements various measures for families.
Division 1 of Part 2 implements the income tax measures announced on October 30, 2014. It amends the Income Tax Act to increase the maximum annual amounts deductible for child care expenses, to repeal the child tax credit and to introduce the family tax cut credit that is modified to include transferred education-related amounts in the calculation of that credit as announced in the April 21, 2015 budget.
Division 2 of Part 2 amends the Universal Child Care Benefit Act to, effective January 1, 2015, enhance the universal child care benefit by providing $160 per month for children under six years of age and by providing a new benefit of $60 per month for children six years of age or older but under 18 years of age.
It also amends the Children’s Special Allowances Act to, effective January 1, 2015, increase the special allowance supplement for children under six years of age from $100 to $160 per month and introduce a special allowance supplement in the amount of $60 per month for children six years of age or older but under 18 years of age.
Part 3 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 3 enacts the Federal Balanced Budget Act. That Act provides for certain measures that are to apply in the case of a projected or recorded deficit. It also provides for the appearance of the Minister of Finance before a House of Commons committee to explain the reasons for the deficit and present a plan for a return to balanced budgets.
Division 2 of Part 3 enacts the Prevention of Terrorist Travel Act in order to establish a mechanism to protect information in respect of judicial proceedings in relation to decisions made by the designated minister under the Canadian Passport Order to prevent the commission of a terrorism offence or for the purposes of the national security of Canada or a foreign country or state. It also makes a related amendment to the Canada Evidence Act.
Division 3 of Part 3 amends the Industrial Design Act, the Patent Act and the Trade-marks Act to, among other things, provide for extensions of time limits in unforeseen circumstances and provide the authority to make regulations respecting the correction of obvious errors. It also amends the Patent Act and the Trade-marks Act to protect communications between patent or trade-mark agents and their clients in the same way as communications that are subject to solicitor-client privilege.
Division 4 of Part 3 amends the Canada Labour Code to increase the maximum amount of compassionate care leave to 28 weeks and to extend to 52 weeks the period within which that leave may be taken. It also amends the Employment Insurance Act to, among other things, increase to 26 the maximum number of weeks of compassionate care benefits and to extend to 52 weeks the period within which those benefits may be paid.
Division 5 of Part 3 amends the Copyright Act to extend the term of copyright protection for a published sound recording and a performer’s performance fixed in a published sound recording from 50 years to 70 years after publication. However, the term is capped at 100 years after the first fixation of, respectively, the sound recording or the performer’s performance in a sound recording.
Division 6 of Part 3 amends the Export Development Act to add a development finance function to the current mandate of Export Development Canada (EDC), which will enable EDC to provide development financing and other forms of development support in a manner consistent with Canada’s international development priorities. The amendments also provide that the Minister for International Trade is to consult the Minister for International Development on matters related to EDC’s development finance function.
Division 7 of Part 3 amends the Canada Labour Code in order to, among other things, provide that Parts II and III of that Act apply to persons who are not employees but who perform for employers activities whose primary purpose is to enable those persons to acquire knowledge or experience, set out circumstances in which Part III of that Act does not apply to those persons and provide for regulations to be made to apply and adapt any provision of that Part to them.
Division 8 of Part 3 amends the Members of Parliament Retiring Allowances Act to, among other things, provide that the Chief Actuary is not permitted to distinguish between members of either House of Parliament when fixing contribution rates under that Act.
Division 9 of Part 3 amends the National Energy Board Act to extend the maximum duration of licences for the exportation of natural gas that are issued under that Act.
Division 10 of Part 3 amends the Parliament of Canada Act to establish an office to be called the Parliamentary Protective Service, which is to be responsible for all matters with respect to physical security throughout the parliamentary precinct and Parliament Hill and is to be under the responsibility of the Speaker of the Senate and the Speaker of the House of Commons. The Division provides that the Speakers of the two Houses of Parliament and the Minister of Public Safety and Emergency Preparedness must enter into an arrangement to have the Royal Canadian Mounted Police provide physical security services throughout that precinct and Parliament Hill. It also makes consequential amendments to other Acts.
Division 11 of Part 3 amends the definition “insured participant” in the Employment Insurance Act to extend eligibility for assistance under employment benefits under Part II of that Act, while providing that the definition as it reads before that Division comes into force may continue to apply for the purposes of an agreement with a government under section 63 of that Act that is entered into after that Division comes into force. It also contains transitional provisions and makes consequential amendments.
Division 12 of Part 3 amends the Canada Small Business Financing Act to modify the definition “small business” in order to increase the maximum amount of estimated gross annual revenue referred to in that definition. It also amends provisions of that Act that relate to eligibility criteria for borrowers for the purpose of financing the purchase or improvement of real property or immovables, in order to increase the maximum outstanding loan amount.
Division 13 of Part 3 amends the Personal Information Protection and Electronic Documents Act to extend the application of that Act to organizations set out in Schedule 4 in respect of personal information described in that Schedule.
Division 14 of Part 3 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to require the Financial Transactions and Reports Analysis Centre of Canada to disclose designated information to provincial securities regulators in certain circumstances.
Division 15 of Part 3 amends the Immigration and Refugee Protection Act to
(a) clarify and expand the application of certain provisions requiring the collection of biometric information so that those requirements apply not only to applications for a temporary resident visa, work permit or study permit but may also apply to other types of applications, claims and requests made under that Act that are specified in the regulations; and
(b) authorize the Minister of Citizenship and Immigration and the Minister of Public Safety and Emergency Preparedness to administer that Act using electronic means, including by allowing the making of an automated decision and by requiring the making of an application, request or claim, the submitting of documents or the providing of information, using electronic means.
Division 16 of Part 3 amends the First Nations Fiscal Management Act to accelerate and streamline participation in the scheme established under that Act, reduce the regulatory burden on participating first nations and strengthen the confidence of capital markets and investors in respect of that scheme.
Division 17 of Part 3 amends the Canadian Forces Members and Veterans Re-establishment and Compensation Act to
(a) add a purpose statement to that Act;
(b) improve the transition process of Canadian Forces members and veterans to civilian life by allowing the Minister of Veterans Affairs to make decisions in respect of applications made by those members for services, assistance and compensation under that Act before their release from the Canadian Forces and to provide members and veterans with information and guidance before and after their release;
(c) establish the retirement income security benefit to provide eligible veterans and survivors with a continued financial benefit after the age of 65 years;
(d) establish the critical injury benefit to provide eligible Canadian Forces members and veterans with lump-sum compensation for severe, sudden and traumatic injuries or acute diseases that are service related, regardless of whether they result in permanent disability; and
(e) establish the family caregiver relief benefit to provide eligible veterans who require a high level of ongoing care from an informal caregiver with an annual grant to recognize that caregiver’s support.
The Division also amends the Veterans Review and Appeal Board Act as a consequence of the establishment of the critical injury benefit.
Division 18 of Part 3 amends the Ending the Long-gun Registry Act to, among other things, provide that the Access to Information Act and the Privacy Act do not apply with respect to records and copies of records that are to be destroyed in accordance with the Ending the Long-gun Registry Act. The non-application of the Access to Information Act and the Privacy Act is retroactive to October 25, 2011, the day on which the Ending the Long-gun Registry Act was introduced into Parliament.
Division 19 of Part 3 amends the Trust and Loan Companies Act, the Bank Act, the Insurance Companies Act and the Cooperative Credit Associations Act to modernize, clarify and enhance the protection of prescribed supervisory information that relates to federally regulated financial institutions.
Division 20 of Part 3 authorizes the Treasury Board to establish and modify, despite the Public Service Labour Relations Act, terms and conditions of employment related to the sick leave of employees who are employed in the core public administration.
It also authorizes the Treasury Board to establish and modify, despite that Act, a short-term disability program, and it requires the Treasury Board to establish a committee to make joint recommendations regarding any modifications to that program.
Finally, it authorizes the Treasury Board to modify, despite that Act, the existing public service long-term disability programs in respect of the period during which employees are not entitled to receive benefits.

[Brian Forbes, Chairman, National Council of Veteran Associations in Canada]

Thank you, Mr. Chair.

NCVA welcomes this opportunity to speak to this committee this morning on Bill C-59, with particular reference to that portion of the legislation dealing with the new Veterans Charter reform.

I first wish to state that it has become readily apparent over recent months that there have been a number of significant developments positively impacting on the operation of Veterans Affairs Canada and the department's relationship with the veterans community. We would be remiss if we did not commend the minister, Erin O'Toole, and the deputy, Walt Natynczyk, on their proactive engagement in the overall reform of the charter and the enhancement of the administrative culture within VAC.

With specific reference to charter reform, it is fair to say that significant momentum and substantial traction have been developed through the various recommendations brought down by the minister, culminating in the establishment of the current statutory amendments before Parliament, which clearly are the government's attempt to respond to their proposals made by this standing committee, the Veterans Ombudsman, the Veterans Consultation Group, the New Veterans Charter Advisory Group, and our NCVA organizations.

Unfortunately, many of the minister's announcements and proposed legislative amendments reflect, in our judgment, half measures and are clearly not fully responsive to the comprehensive recommendations made by this committee and the aforementioned multiple advisory groups. After years, however, of what I have described as unacceptable inertia within VAC, there are indeed solid indications that the first phase of positive, incremental change is taking place. It remains our mandate, and I might respectfully suggest the responsibility of this committee and veteran stakeholders, to maintain pressure on the government to complete this vital initiative in addressing the outstanding inequities which still remain in the charter.

Mr. Chair, I would now like to make a number of general comments on the bill and the impact it will have on the new Veterans Charter.

First, the clear focus on seriously disabled veterans is commendable as it has consistently been the position of NCVA that the highest priority of the veterans community and the government must be seriously injured veterans.

Second, it is self-evident upon a review of the substantive provisions of the statutory amendments that the devil will be in the details as there are a number of references in the legislation to regulations and policy guidelines that have yet to be formulated to support the general provisions of the act. It is my opinion that until these regulations are finalized, it will not be possible to evaluate the precise eligibility criteria for the newly proposed major benefits and the “factors to be considered”, which are often mentioned in the bill, in the administration of the new law. It will be incumbent on veteran stakeholders and indeed this standing committee to monitor closely the draft regulations and policy guidelines to ensure that the substantive provisions of the act are not diluted or unduly restricted.

Third, it is also readily apparent that budgetary constraints still exist. It is our opinion, upon a review of the minister's announcements and the statutory amendments, that the proposals have been structured to fit into the budgetary envelope, resulting in proposed benefits that are targeted to specific cohort veterans rather than the veteran population at large. Unfortunately, in our view, the government fixation with balancing the budget in this election year remains a restraint on the complete new Veterans Charter reform at this time.

Fourth, as I stated to the minister through recent correspondence and through my presentation to the veterans summit, much more needs to be done to rectify the voids that have been readily identified in the charter. The present state of development cannot be considered a total fait accompli, but merely a significant first stage of remedial legislation.

Mr. Chair, I know we're under certain time constraints and my brief is fairly lengthy. I've made it available to members of the committee, but I'd like to highlight some of my concerns with regard to the bill and those areas where there are still gaps and inequities in the charter which have yet to be addressed in this legislation.

First, the earnings loss benefit must be elevated from 75% of former military income to 100% in accordance with the long-standing and consistent recommendations of the New Veterans Charter Advisory Group, the Veterans Consultation Group, and NCVA—or at least to 90%, as proposed by my friend, the Veterans Ombudsman. The current reduction of 25% in income is unacceptable, particularly given that this loss of essential revenue is imposed when veterans and their families face a period of rehabilitation as they attempt to re-establish themselves in Canadian society.

This is particularly material to those who are permanently incapacitated. In this regard, the career probable-earnings approach identified by this committee should be implemented to ensure the true impact of the projected career income loss is recognized. This proposal can be implemented by further reform of the PIA or the PIAS, or alternatively by a separate evaluation based on the mechanisms used by the Canadian civil courts to ascertain future loss of income for severely injured plaintiffs

Second, the SISIP long-term disability policy needs to be eliminated from veterans legislation and be applied only to non-service related disability.

Beyond the unnecessary duplication of the programs—SISIP and ELB—the compensation of veterans and their dependants should not be a function of the insurance industry, whose mandate in many situations is to minimize exposure of insurers' policies when applied to injured or disabled individuals. I speak more of that in the paper, and I'll leave that to your reading at a separate time.

Third, disability awards commensurate with civil court general damages should be facilitated by VAC.

It is to be noted that in lieu of implementing this long-standing recommendation, the minister has opted to propose a new critical injury benefit in the amount of $70,000. This CIB is limited to the specific circumstances of a transitionally incapacitated veteran and to high-end disability award recipients. It is noteworthy in this regard that the CIB is fraught with definitional issues as to who is eligible for this benefit and what factors are to be considered by adjudicators in determining the scope and extent of this new provision. Although we support the establishment of the innovative CIB in recognition of the plight that seriously disabled veterans confront, the choice of VAC to compensate only this particular class of veterans, as opposed to incrementally increasing all pensions in the disability award system, is of concern. I might add that this recommendation has been consistently brought forward over the last six or seven years not only by this committee, but by all of the other advisory groups that have looked at the charter.

Fourth, improved access to permanent impairment allowance and entitlement to higher-grade levels of the allowance needs further evaluation. It will be recalled that the Veterans Ombudsman, Mr. Parent, in his empirical study of the charter identified that 50% of seriously disabled veterans were not receiving the PIA, and consequently the PIAS, and that 90% of these veterans receiving the award were only obtaining grade three, the lowest grade. The minister's proposal to widen the regulatory definition of PIA eligibility is commendable, but once again does not fully satisfy all aspects of the reform of this important allowance. This is particularly so for those seriously disabled veterans who fail to satisfy the criteria for PIA, but it is also of great significance when one considers that the amount of the PIA is a major element of the new retirement income security benefit, as was pointed out by Mr. Butler this morning.

We continue to strongly feel that our proposal to the standing committee in this regard is the best approach to improving this access to PIA. That is, once a veteran is deemed to be permanently incapacitated, the disability award received by such a veteran should be the major determinant in assessing his or her grade level of PIA. If you're over 78% disability award, you should be entitled to a grade one PIA. Between 48% and 78%, you should be at grade two. It's simple, straightforward, and triggered by the disability award.

Fifth, the family caregiver relief benefit requires further re-evaluation as it fails to comprehensively provide adequate financial support for the families of seriously disabled veterans where significant needs of attendants must be provided by a caregiver. This benefit, as brought forward by the minister, is commendable insofar as it goes, as a targeted support to allow caregivers appropriate respite or relief, but in my judgment, it represents only one element of the overall concerns confronting the caregivers of seriously disabled veterans in need of attendants. Such families are also facing, in many cases, a significant diminishment in income due to the fact that the caregiver spouse has been forced to give up his or her employment, and when coupled with the veteran's 25% loss of income, through SISIP or ELB, it often results in a financial crisis in the overall family budget.

I'll just be a couple of minutes, Mr. Chair. Thank you.

[David Vigneault, Assistant Secretary to the Cabinet, Security and Intelligence, Privy Council Office]

Thank you very much.

I would like to thank the chair and committee members for the opportunity to speak today about division 10 of part 3 of Bill C-59. This division proposes amendments to the Parliament of Canada Act in order to establish the parliamentary protective service.

My name is David Vigneault, and I am the assistant secretary to cabinet for Security and Intelligence in the Privy Council Office. I am appearing today with Isabelle Mondou, who is the counsel to the Clerk of the Privy Council Office.

At the outset, I would like to explain that the Privy Council Office has been closely involved in the drafting of the legislation being studied today, in collaboration with legal counsel from House of Commons and Senate administrations, the RCMP, Public Safety Canada and Justice Canada. Isabelle and I are here today to speak to this bill.

I would like to highlight, however, that the Privy Council Office is not directly involved in transition planning or operational decision making to establish the Parliamentary Protective Service. This work will be led by the incoming director of the Parliamentary Protective Service and the RCMP, in close cooperation with representatives from the Senate Protective Service and the House of Commons Protective Service, under the auspices of the Speaker of the House of Commons and the Speaker of the Senate. We are aware that transition planning is already under way, and that joint working groups have been established.

Our presentation relates to the bill, which is why we have been invited here today.

In terms of background, I would like to highlight that this legislation was drafted in response to the express will of Parliament. Following the terrorist attack on Parliament Hill on the 22nd of October 2014, the House of Commons and the Senate passed motions to invite the RCMP without delay to lead operational security throughout the parliamentary precinct and the grounds of Parliament Hill, while respecting the privileges, immunities, and power of the respective Houses, and ensuring the continued employment of existing and respected parliamentary security staff.

In April the economic action plan 2015 also highlighted the need for an integrated security force to ensure a seamless response to threats and stated that the government would bring forward legislative amendments to implement this integrated security force. Notably, the direction to integrate security forces is consistent with recommendations made by the Auditor General in June 2012 that the House of Commons and Senate administrations should examine “the possibility of moving toward a unified security force for the Parliamentary Precinct.” The Auditor General's report noted that unifying the security forces for Parliament Hill under a single point of command would make it possible to respond to situations more efficiently and effectively.

I will now turn things over to my colleague, Isabelle.

[Guy Parent, Veterans Ombudsman, Office of the Veterans Ombudsman]

Mr. Chair and committee members, thank you for inviting me to appear today to discuss division 17 of part 3 of Bill C-59.

Thank you for the opportunity, and I also want to thank you for the critical role that you have played in the past couple of years that has brought us to this juncture.

Your report, “The New Veterans Charter: Moving Forward”, published in June 2014, helped to focus the debate, establish priorities, and bring the veterans community together. lt also provided government with a unanimously approved blueprint for moving forward to address veterans' issues. lt cannot be denied that this is now happening.

In retrospect, I am particularly pleased that the Office of the Veterans Ombudsman's “Report on the New Veterans Charter and Actuarial Analysis”, published in October 2013, was able to assist with your work.

The proposed legislation represents significant progress on several issues of long-standing concern to veterans and their families. Because it is narrowing the gap on needed changes, it is important that it pass quickly and be implemented without delay.

The work of the Office of the Veterans Ombudsman has been effective to date because it is evidence-based. Results are measured against the fairness principles of adequacy—are the right programs and services in place to meet the needs of veterans and their families—the principle of sufficiency—are the right programs and services sufficiently resourced, in terms of both finance and human resources—and, finally, the principle of accessibility—are eligibility criteria creating unfair barriers, and can the benefits and services provided by VAC be accessed quickly and easily?

It is too early to offer you my opinion on the effectiveness of the proposed legislation. It is still before Parliament and its regulations have not been published, and as a result, implementation has not been initiated. However, I can share with you today my perspective, in principle. So let us look at the proposed initiative through the lens of fairness.

Do they address the fairness principles of adequacy, sufficiency, and accessibility? I believe that they do, in principle.

Adequacy is addressed by the new retirement income security benefit, which would provide moderately to severely disabled veterans with continued assistance in the form of monthly income support payments after age 65, therefore meeting a new need for the veterans and their families. lt also applies to the hiring of new front-line staff to improve one-on-one support for veterans.

Sufficiency is addressed in principle by the parity of the earnings loss benefit for injured reserve force veterans, who will now get the same minimum income support payment through the earnings loss program as regular force veterans do, again eliminating unfairness. The hiring of new front-line staff to improve one-on-one support for veterans also addresses sufficiency with regard to human resources.

Accessibility is addressed by the broadened eligibility criteria for the permanent impairment allowance, which, together with the PIA supplement, provides approximately $600 to $2,800 a month in lifelong monthly financial support to veterans whose employment potential and career advancement opportunities have been limited by a permanent service-related injury or illness. lt is also addressed by the proposed new critical injury benefit, which will provide a $70,000 tax-free award to support the most severely injured and ill Canadian Armed Forces members and veterans.

Going forward, while the changes put forward in Bill C-59 are going to have a positive effect on meeting the needs of veterans and their families, we need to address non-economic compensation for pain and suffering, transition from military to civilian life, and veteran-centric service delivery.

We also need to always remember that the new Veterans Charter is a living document needing timely reviews and updates.

Collectively, I think that we should be encouraged at this juncture that our efforts are making a difference in addressing long-standing issues affecting veterans and their families.

This does not mean that the gap has been closed, but it is narrowed. However, if these new initiatives are looked at as steps in a commitment to continuously improve and adapt benefits to the evolving needs of veterans and their families, then this is a very positive indicator for the future.

Mr. Chair, I would like to also inform the committee that just yesterday we published an update on the recent announcements in regard to your ACVA recommendations, on how they actually have improved things for veterans and their families. We have provided copies that will be distributed to the members afterwards.

Thank you very much, Mr. Chair. I'm ready for your questions.

[Jean-Denis Fréchette]

Time will tell. This is what we will do in the future with our fiscal sustainability report later this year, in October actually. We will assess the impact of Bill C-59 on that, the kind of impacts Bill C-59 would have on the health systems of Canada.

One thing which is interesting is when the PBO did its update on the TFSA, we had a graph that showed the status quo and the $10,000 limit. In 2070, if the status quo had stayed, the contribution room would have been the same as with the $10,000. What I'm saying is that, if nothing had been done, we would not have that kind of discussion, but we would be at the same kind of contribution room in 2070.

[Rosane Doré Lefebvre, NDP, Alfred-Pellan, QC]

Thank you very much, Mr. Chair.

I would like to thank the witnesses who came here today to discuss various provisions of Bill C-59 relating to public safety.

I have a number of questions about the new powers that have been given to the Minister of Public Safety with respect to the revocation of passports. I don't know if you can answer this question, but I'd like to know who determines whether a case falls within the jurisdiction of the Minister of Public Safety rather than the Minister of Immigration.

Who makes that decision?

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

Ms. MacEwen, you may be pleased to note that we were at a Chamber of Commerce event this morning and they cited workforce training as their number one priority for governments to take on going into the fall campaign.

Under some of your recommendations with regard to Bill C-59, I'm wondering what the gap is that is not being addressed with respect to companies taking on and training apprentices and bringing them up to their full Red Seal and Blue Seal qualifications. We're spending an extraordinary amount of money, both as government and as individuals across this country, with the promise that getting those skills will enable people to get into the areas where a skills shortage has been identified. What's the problem with Bill C-59 in terms of addressing that gap?

[Jean-Denis Fréchette, Parliamentary Budget Officer, Library of Parliament]

Thank you, Mr. Chair.

I'm the only witness who got some chocolate. I suspect it's a perk because I'm the last one to speak.

Mr. Chair, vice-chairs, and members of the committee, thank you for inviting me to assist with your study of Bill C-59, Part 1.

My comments are focused on the increase in the annual contribution limit for Tax-Free Savings Accounts (TFSAs), a measure the Office of the Parliamentary Budget Officer has studied in detail.

Before the changes proposed in Bill C-59, the fiscal impact of the TFSA program was expected to grow from $1.3 billion in 2015 to $54 billion in 2060. This is equal to a roughly eightfold increase as a share of the economy. The changes to the contribution limit proposed in Bill C-59 would increase the impact in 2060 by a further 20%, to $63.6 billion.

The proposed TFSA limit of $10,000 will not be indexed to inflation. This policy decision reduces total long-run fiscal costs by 15% in 2060.

The implications of the changes in Bill C-59 to the long-run sustainability of debt as a share of GDP will be assessed by the PBO in a future report, our fiscal sustainability report.

Over the long run, the TFSA program will become increasingly regressive, by income and especially by wealth, as you can see in Figures 2 and 3 of our presentation. By 2060, households in the top half of the income distribution will benefit by 20% more than households in the lower half. The wealthiest 50% of households are projected to benefit by 1.2 times more than the lower half.

Finally, Mr. Chair, as per your question the other day about the amount of new money or existing savings invested in TFSAs that involve the purchase of equity or bonds in Canadian companies, I can report that TFSA administrative data and other data sources that we have obtained so far cannot currently be used to determine whether investments in Canadian equities or bonds have increased due to TFSAs.

However, TFSA contributions are expected to originate mostly from the reallocation of existing savings and taxable accounts. External estimates of the responsiveness of savings through tax-preferred programs like the TFSA are mixed, but typically small. The PBO therefore expects that a comparatively small proportion of TFSA contributions will be the result of new savings. The TFSA is relatively new and the PBO has not yet independently assessed the savings behaviour of Canadians in response to the TFSA program, but this work could be pursued in a future study.

Thank you, Mr. Chair.

[Bruce MacDonald, President and Chief Executive Officer, Imagine Canada]

Thank you, Mr. Chair. I would like to thank you for your invitation and for giving me the floor today.

As an umbrella organization for the charitable and non-profit sector, Imagine Canada is pleased to share its thoughts with you regarding the provisions in Bill C-59 and the federal budget for our sector.

I do not have to remind the committee about the contribution of charitable and non-profit organizations in Canada and around the world, whether in terms of social services, arts and culture, amateur sport, the protection of the environment, education, health care and health research, international development or religious practices.

We keep saying that the charitable and non-profit sector is a major economic asset for Canada. It accounts for 8% of the GDP and employs over 2 million people from coast to coast.

In 2012, this same committee held extensive hearings on the issue of tax incentives for charitable donations in Canada. You heard the testimony of organizations from across the country, you learned about our challenges and possibilities, and you made recommendations to improve our financial health.

Every federal budget since 2012, including this one, has responded to your recommendations.

With regard to Bill C-59, it clarifies eligibility for qualified donee status for foreign charitable foundations. We see this mainly as a housekeeping measure, ensuring that the letter of the law is brought into line with the intent of a previous budget measure.

While we would have liked to see other measures from the 2015 budget included in this bill rather than waiting for subsequent legislation that may or may not come prior to the upcoming election, we appreciate that the department wants to take the time to get the particulars right.

We are pleased that the budget expanded the Mitacs internship program, in which charities and non-profits are now able to participate. Access to specialized research will help many organizations improve the work they do.

We look forward to two budget measures in particular that arose from this committee's hearings in 2012, and which we strongly support.

The first one of these will see a capital gains exemption when the proceeds of selling real estate or private company shares are donated to charity. Members of the committee will know that in terms of encouraging donations from the broadest array of citizens this was not Imagine Canada's top priority. That being said, those of you with whom we have spoken aIso know that we have strongly supported this measure and we were pleased to see it in this year's budget.

We are particularly pleased that the provision will apply to cash donations made from the proceeds of the sale of such assets. While addressing potential valuation issues, this will make it easier for donors to split their donations among a greater number of charities, if they so wish. lt will also make it easier for recipient charities, particularly small charities, to manage the receipt of such donations as they will be dealing with cash donations and will not have to manage assets that may be transferred to them. We are hopeful this measure will translate into hundreds of millions of dollars' worth of new donations over the next several years.

The budget also announced that charities will be allowed to invest their assets in limited partnerships. This will benefit the sector in two ways. First of all, foundations will be able to make investments, which they previously could not do, to diversify their portfolios. Second, operating charities and non-profits may themselves be involved in limited partnerships. The ability of foundations to invest in these ventures could free up significant amounts of capital. While we are waiting for specific details on how this will work, our initial estimate is that tens or even hundreds of millions of dollars could be available annually for partnerships involving charities and non-profits.

These two issues were among those about which this committee heard testimony and made recommendations. By our count, the only significant outstanding recommendation is the stretch tax credit for charitable giving, which we recognize would come at the highest cost to the treasury, as we believe it would have the greatest impact.

I hope that next year I'll be invited back to testify about the adoption of the stretch tax credit. ln the meantime, I want to recognize the significant progress that has been made in budget 2015.

Thank you.

[Angella MacEwen, Senior Economist, Social and Economic Policy, Canadian Labour Congress]

Thank you.

On behalf of the 3.3 million members of the Canadian Labour Congress, we want to thank you for the opportunity to present our views today. The CLC brings together workers from virtually all sectors of the Canadian economy, in all occupations, and in all parts of Canada.

Part 1 of Bill C-59, which we're speaking to today, would implement a wide variety of income tax and related measures. Today our comments will be limited to three provisions: reducing the required minimum amount for withdrawal annually from the RRIF; increasing the annual contribution limit for the tax-free savings accounts; and renewing the accelerated capital cost allowance for investment in machinery and equipment.

First of all, in terms of retirement security, the changes to the RRIF withdrawals and the increases to the tax-free savings accounts are measures that are both related to retirement security, but it will be no surprise to members of this committee that the Canadian Labour Congress feels that expanding the Canada pension plan is a much better solution to the looming retirement security crisis in Canada. Changes to RRIF withdrawals benefit older workers who already have RRSP savings, but they do little for workers without the means to save through RRSPs. This is significant because only a third of Canadians today contribute to RRSPs, and the unused RRSP contribution room reached $790 billion in 2013. Eleven million workers in Canada have no pension plan other than the CPP. At the same time, the annual contribution limit for the tax-free savings account would increase to $10,000, as has already been discussed, and this measure would have an estimated cost to federal revenues of $1.1 billion by 2019.

Even at the maximum annual contribution of $5,500, the TFSA is projected to cost the federal government up to $15 billion annually, and cost the provinces another $8 billion when the program is fully mature. Doubling would further increase this cost almost exclusively to the benefit of higher income earners. In contrast, expanding the CPP would benefit all workers, follow workers who change employers or who have multiple employers, and be simple for employers to administer.

In terms of supporting manufacturing, we recognize that as a result of globalization, unfavourable trade deals, a high dollar, and the most recent recession, manufacturing in Ontario and across Canada has experienced devastating losses over the past decade. In recognition of this reality, we have long supported renewing the accelerated capital cost allowance for investment in machinery and equipment. This measure was first introduced in 2007, renewed in 2011 and 2013, and would now be renewed until 2026. While we support this measure, we want to note that corporate tax cuts have failed to spur business investment. In the same vein, we feel that continuing this accelerated capital cost allowance would be insufficient to support a struggling manufacturing sector in Canada.

Coming out of the recession, business investments in manufacturing have been very slow to rebound, despite the continuation of the accelerated capital cost allowance. In October 2014, the monetary policy report released by the Bank of Canada suggested that this is in part because of a semi-permanent loss of capacity in several manufacturing export sectors. Low interest rates and low taxes have not been sufficient drivers of growth. Weak and uncertain demand have played a significant role in subdued investment. All signs point to the need for the federal government investment in infrastructure to spur growth and therefore boost business confidence and private investment.

A singular focus on tax cuts has significant drawbacks. We note that while the budget 2015 documentation mentions the importance of investment in skilled labour in the same sentence as it mentions investment in machinery, government action on this front has been noticeably absent.

Let me remind the committee of some of the recommendations the Canadian Labour Congress has made in the past that would make a difference to investment in skilled workers.

One, establish a national skills council that brings key stakeholders together to identify skills gaps and develop strategies, policies, and programs to address them.

Two, establish a mandatory national workplace training fund. Employers with a payroll of more than $1 million who fail to invest 1% of their payroll in training should pay the shortfall into a public fund that is used to finance work-related training initiatives.

Three, increase funding for the labour market agreements, the LMAs, with the provinces and territories to help vulnerable unemployed workers, including immigrants, aboriginal peoples, persons with disabilities, women, older workers, younger workers, and less skilled individuals.

Four, mandate employers to hire and train apprentices. The federal budget should ensure that those projects receiving federal dollars through the new building Canada fund and the investment in affordable housing program mandate employers to hire and train apprentices.

This budget further erodes the fiscal capacity of the Canadian state and rejects the opportunity to take advantage of exceptionally low borrowing costs and invest in the current and future needs of working people in Canada.

Thank you.

[Ron Bonnett, President, Canadian Federation of Agriculture]

Thank you, and thanks for the invitation to attend.

As mentioned, I'm the president of the Canadian Federation of Agriculture, and we represent about 200,000 farm families across the country.

I'd like to make a few comments on some of the provisions in the 2015 federal budget and Bill C-59.

The first concerns the decrease in the small business income tax rate from 11% to 9%, applying to the first $500,000 of income.

This measure will provide broad tax relief for Canadian producers, providing them an additional flexibility to manage risk, to reinvest in their operations, and to improve productivity. Any such relief directly contributes to Canadians' agricultural competitiveness in global markets.

As well, the extension of the tax deferral regime that applies to patronage dividends paid to members of agricultural cooperatives through eligible shares is welcomed. Agricultural cooperatives provide valuable support to small and medium-sized agricultural producers as a resilient business model that provides improved risk management capacity, improved market access, and a variety of other benefits to their members.

These businesses play an important role in the economies of rural communities across Canada, and such a tax deferral enhances cooperatives' capitalization capacity and frees up important investment funds that would otherwise be directed towards addressing members' associated tax liabilities.

As well, I would briefly like to comment on the provision for accelerated capital cost allowance for investments in machinery and equipment. While the benefits of such a measure do not directly relate to the majority of agriculture operations, a vibrant food processing industry is essential to the ongoing success of the Canadian agricultural industry.

I would like to dedicate the rest of my time to discussing the increase to the lifetime capital gains exemption and the important role that tax policy plays in what is soon to be a significant transfer of farm businesses to the next generation.

The continued success of Canadian agriculture as an economic driver for Canada requires a tax policy environment conducive to continued viability and competitiveness for Canadian farm businesses. One of the most pressing issues facing Canadian agriculture is the rising age of Canadian farmers. Over the next 10 to 15 years we expect at least 120,000 farms to transfer ownership, with total assets well over $50 billion. As such, CFA would like to express its support for the bill's immediate increase to the lifetime capital gains exemption for owners of farm and fishing businesses from approximately $813,000 to $1 million.

The additional exemption of nearly $200,000 in capital gains offers producers important tax relief, allowing them to maintain more of their capital for retirement and also providing additional flexibility to develop a succession plan that meets the needs of both parties.

There are other things that can be done to improve the issue of succession planning. Capital gains exemption is just one aspect of the tax policy environment that influences the succession process and operational arrangements involved.

We have several outstanding recommendations.

The first concerns barriers facing farms transferred to the next generation under joint sibling ownership. Subsection 55(2), often regarded as the most complex section of the Income Tax Act, adds significant barriers to splitting up a farm corporation that is jointly owned by two siblings. This is because section 55 considers siblings to be unrelated or at arm's length.

Joint sibling ownership will be a common result of many intergenerational transfers over the next decade. Parents can transfer to their children on a tax-deferred basis, but unexpected issues can arise following the transfer that even the most comprehensive succession plan cannot account for. If the siblings then need to split up the operation, it can no longer be done on a tax-deferred basis. CFA has recommended that the Income Tax Act deem siblings to be non-arm's length, specifically for farm corporations.

Second, section 84.1 of the Income Tax Act currently limits the access to the capital gains exemption when a transaction occurs between family members. In the sale of a company's shares to a non-related purchasing corporation, a holding company is generally used as the purchasing vehicle. This allows the purchaser to access the acquired company's income stream and allows the vendor to access their enhanced capital gain exemption on the sale.

However, when dealing with family, the benefits of this structure are effectively denied. Most family farms now operate as corporations, and as such the intergenerational family farm transfer rules are not facilitating the transfer.

We recommend that amendments be made to section 84.1 of the Income Tax Act so that it no longer contains those constraints.

This is a brief overview. We have provided the members with a full pre-budget submission, and it goes into more detail.

In conclusion, I would like to thank the committee for allowing me to speak to this bill and once again reiterate our support for the four amendments I previously touched on.

[Allister W. Young, Associate Professor, Taxation, Goodman School of Business, Brock University, As an Individual]

I am here today to address provisions of Bill C-59 dealing with changes to the tax-free savings account, specifically the proposed increase of the TFSA annual contribution limit from the current $5,500 to $10,000.

I speak against this very large increase of more than 80% on the basis that the existing TFSA, with its $5,500 limit, is already failing to serve its stated purpose. To almost double the limit will exacerbate the inequity that research has already identified.

I will refer you specifically to our article published in the Canadian Tax Journal entitled “Tax-Free Savings Accounts–A Cautionary Tale from the UK Experience”.

The purpose of that research project was to predict how Canadians would use the TFSA and specifically whether the government's promise would be borne out, i.e., that the introduction of the TFSA would benefit all Canadians at all income levels in all walks of life.

We used data from the British experience with their tax-free savings plan, the ISA, or individual savings account, a tax measure very similar to the Canadian TFSA. There was every reason to believe that the Canadian experience would be similar to the effects that the British savings plan had already shown, as follows:

One, as income rises, so does plan participation.

Two, the introduction of such a plan does little to break down the barriers to savings faced by low-income individuals.

Three, the plan take-up rate in terms of new savings by low-income individuals could be less than 5%.

Four, the proportion of accounts held by low-income individuals falls consistently over time, as the proportion held by high-income individuals continues to rise.

Five, these plans provide a significant opportunity for income splitting in single-income households.

Six, the typical account holder is a man, belongs to the highest-income cohort, and is approaching retirement.

[John Davies, Director General, National Security Policy, Department of Public Safety and Emergency Preparedness]

Thank you, Mr. Chair.

I'm happy to provide a brief overview of the measures being proposed in Bill C-59, specifically with regard to the prevention of terrorist travel act in tandem with the proposed changes to the Canadian passport order. The proposed amendments underline the government's continuing commitment to strengthen national security and protect Canadians at home and abroad, as they are intended to address the evolving global threat environment.

To begin, let me provide you with a brief overview of the changes to the Canadian Passport Order announced on May 7 related to national security.

First, the Minister of Public Safety and Emergency Preparedness will have the authority to cancel a passport when there is reasonable grounds to suspect it will prevent the commission of a terrorism offence, or for national security purposes. After a passport is cancelled, law enforcement and border control partners are notified and the passport can no longer be used for travel. However, cancellation is a temporary measure used until investigation is completed. If at the conclusion of an investigation there are insufficient grounds to revoke the passport, the passport will be reissued to the individual.

In some circumstances the passport may be cancelled by the minister without prior notice to the individual. In these instances the individual will be notified as soon as possible after the cancellation.

The order also provides an administration reconsideration mechanism to challenge passport cancellation decisions. Once a person has been advised of a cancellation, they are given 30 days to respond and provide information that will be taken into account by the minister when reconsidering the decision to cancel. The individual can appeal the cancellation before the Federal Court of Canada within 30 days of the date on which they receive the notice of the reconsideration decision. Provisions to appeal cancellation are provided for in proposed section 4 of the prevention of terrorist travel act.

Second, the minister can also refuse or revoke a passport when there are reasonable grounds to believe it will prevent the commission of a terrorism offence, or for national security purposes.

Finally, the order also provides the Minister of Public Safety and Emergency Preparedness the authority to refuse passport services for up to 10 years, during which an individual may not apply for a passport. During a period of refusal of passport services, a person may be required to travel on an urgent, compelling, or compassionate basis. There is an existing mechanism administered by Passport Canada to allow them to travel under these circumstances.

In these situations, an individual may submit an application for a temporary passport for travel and provide the documents necessary to support the justification.

Supporting these changes to the Canadian Passport Order are the legislative measures before you today.

These measures allow individuals to challenge passport decisions, protect information used in those proceedings, and set out the rules for both an appeal of the cancellation or a judicial review of the refusal or revocation.

In national security cases sensitive information is often required to support the cancellation or revocation of passports. During judicial proceedings protecting that sensitive information from disclosure is important to prevent adverse impacts on national security, or for the safety of the person. The government must balance the requirement to protect sensitive information with the ability to successfully uphold passport decisions taken on national security or terrorism grounds.

These proposed amendments will enable a Federal Court judge to protect sensitive information when presiding over proceedings for passport cancellation, revocation, or refusal of services for national security or terrorism purposes. The judge will be required to consider sensitive information in making the decision and to protect that information from disclosure if, in the judge's opinion, the disclosure could be injurious to national security or endanger the safety of any person. While some sensitive information may be withheld, the individual would still receive a summary of the information that was used to make the decision.

In addition, in the context of appeals and judicial review of national security passport decisions in the Federal Court, an individual may introduce information to respond to the government's case.

Overall, this approach should streamline the process and result in more timely decisions, which are in the interest of all parties.

The procedures have been designed to provide the individual with an opportunity to present their case and to be reasonably informed of the government's case. These measures are also consistent with the ability of the courts to review other ministerial decisions, such as the listing of terrorist entities and the listing of persons provided in Bill C-51 under the secure air travel act.

These safeguards strike a good balance between the right to protect Canadians against the threat of terrorism and the right of affected individuals to fair treatment.

Thank you. I am happy to take any questions the committee might have on the measures being proposed.

[Michel D. Doiron, Assistant Deputy Minister, Service Delivery, Department of Veterans Affairs]

Thank you kindly, Mr. Chair.

Good morning, Chair, members, mesdames et messieurs.

As the chair said, my name is Michel Doiron and I am the assistant deputy minister for service delivery at Veterans Affairs. With me today is my colleague Bernard Butler, the acting assistant deputy minister of policy, communications, and commemoration.

I wish to thank you for the opportunity to appear before you today on an issue of importance and great interest to veterans and their families, and that is those elements of the government's response to your committee's report of June 2014, titled “The New Veterans Charter: Moving Forward”, that are contained in economic action plan 2015, or Bill C-59. The legislation, if passed, will amend the Canadian Forces Members and Veterans Re-establishment and Compensation Act, commonly known as the new Veterans Charter, to address a number of the concerns and gaps that have been identified.

There are essentially five legislative amendments/provisions contained within the bill.

The first provision introduces a purpose clause “to recognize and fulfil the obligation of the people and Government of Canada to show just and due appreciation to members and veterans for their service to Canada” and further provides that the “Act shall be liberally interpreted so that the recognized obligation may be fulfilled”.

The second significant provision enhances Veterans Affairs Canada's ability to support transition to civilian life. It authorizes Veterans Affairs Canada to provide information and guidance to Canadian Armed Forces members and veterans on the benefits and services that may be available to them in order to help them transition and to make decisions on applications for benefits and services prior to release.

There are three additional amendments that effectively create new benefits for veterans. These new benefits will strengthen the government's support provided to seriously disabled veterans and their families through the new Veterans Charter.

The first benefit, known as the retirement income security benefit, RISB, would provide moderately to severely disabled veterans—those who need it most—with continued assistance in the form of a monthly income support payment beginning at the age of 65.

The second benefit, the family caregiver relief benefit, would provide eligible veterans with a tax-free annual grant of $7,238 so that their informal caregivers, often their spouses or other devoted family members, will have flexibility or relief when they need it while also ensuring that veterans' care needs are met.

The third benefit, the critical injury benefit, or CIB, would provide a $70,000 tax-free award to support the most severely injured and ill Canadian Armed Forces members and veterans.

These new benefits will complement the existing suite of services and benefits available through the new Veterans Charter and add depth to the supports available both to those injured in service to their country and to their families from the Government of Canada.

As announced in the budget, additional staff will also address delays in service delivery, especially for the most seriously disabled and their families. We will hire more than 100 permanent case managers for improved one-on-one services. More than 100 new disability adjudication staff, temporary and permanent, will improve the processing time for veterans who submit an application for a disability benefit application. This is part of the department's commitment to service excellence.

Thank you for listening.

I will now open the floor, Mr. Chair, to any questions the committee may have for Bernard or for me.

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is meeting number 82 of the Standing Committee on Finance.

Our orders of the day are pursuant to the order of reference of May 25, we are studying Bill C-59, an act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures. This is our first session.

We have with us here this morning a number of individuals to present. I want to welcome all of you and to thank you for appearing here this morning.

We have Professor Maureen Donnelly from Brock University.

We also have Professor Allister Young, from Brock University as well, I understand.

We have from the Canadian Federation of Agriculture, Mr. Ron Bonnett, president.

From the Canadian Labour Congress, we have their senior economist, Ms. Angella MacEwen.

From the Canadian Manufacturing Council, we have the vice-president, Mr. David Podruzny.

From Imagine Canada, we have the president and CEO, Mr. Bruce MacDonald.

Welcome to everyone.

From the Library of Parliament, we have Monsieur Jean-Denis Fréchette.

Welcome once again, Mr. Fréchette.

You will each have five minutes for your opening statements, and then we'll have questions from members.

We'll begin with Ms. Donnelly, please.

[The Chair, Conservative, Royal Galipeau]

Good morning. Welcome to the 50th meeting of the Standing Committee on Veterans Affairs.

This morning, we are beginning our study of division 17 of Bill C-59, An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures.

To have a compelling start to this study, we will have the pleasure of hearing from two respected officials from the Department of Veterans Affairs during the first hour of this meeting: Michel Doiron, assistant deputy minister, service delivery, and Bernard Butler, associate assistant deputy minister, policy, communications and commemoration.

This half of our meeting will end at 9:45 a.m., at which point, we'll take a quick break. Then we will hear from Guy Parent, Veterans Ombudsman, joined by Sharon Squire, Deputy Ombudsman, Executive Director of Operations; as well as from Brian Forbes, Chairman of the National Council of Veteran Associations in Canada.

Each stakeholder will make a seven-minute presentation. Normally it's 10 minutes, but we have more witnesses now, so we're going to squeeze you in. Members will then have an opportunity to ask witnesses questions.

Mr. Doiron, you may go ahead.