Bill C-323 (Historical)

An Act to amend the Income Tax Act (rehabilitation of historic property)

This enactment amends the Income Tax Act to establish a tax credit for expenses related to the rehabilitation of a historic property. It also establishes a tax deduction for the capital cost of property used in the course of such a rehabilitation.

Committees of the House

[The Speaker, Liberal, Geoff Regan]

I declare the motion carried.

Accordingly, pursuant to Standing Order 97.1(2)(d), the proceedings on Bill C-323 shall come to an end.

Environment and Sustainable Development

[The Speaker, Liberal, Geoff Regan]

The House will now proceed to the taking of the deferred recorded division on the motion to concur in the ninth report of the Standing Committee on Environment and Sustainable Development concerning the recommendation not to proceed further with Bill C-323.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Mr. Speaker, I would like to thank the member for York—Simcoe for introducing this private member's bill.

Canadians take great pride in their built heritage, as they do in their diverse culture and history. Bill C-323 would provide Canadians with a much needed tax credit to assist them in repairing and maintaining heritage buildings. I have spoken with many constituents in my riding of Kootenay—Columbia, and the bill is very welcomed there. We have many heritage homes and other buildings, and repairing them can be very expensive.

Recently, I had the privilege of sitting on the Standing Committee on Environment and Sustainable Development while we studied this bill. At the same time, the committee also looked at the state of federal funding and management of national heritage. Along with other members of the committee, I learned a great deal. I learned that between 2003 and 2006, the federal government offered financial incentives for the restoration of commercial buildings.

Over three years, the commercial heritage properties incentive fund contributed $15 million for this purpose. The economic impact of the fund was $143.4 million in restoration work, a sound investment, and in fact, almost a ten to one return on government investment. While the committee examined many heritage concerns, I will focus on the testimony and recommendations about built heritage because they speak directly to the issues we are considering here with Bill C-323.

The committee heard from Ms. Natalie Bull, executive director of the National Trust for Canada. Ms. Bull said:

Why would a parliamentary committee be concerned with the state of historic places in Canada? I think there are lots of great reasons. For a start, there is the potential for positive impacts on climate change. Canada's buildings are the third-largest greenhouse gas emitting sector, and the reuse and renewal of heritage buildings capitalizes on materials and energy already invested, reduces construction and demolition waste, and avoids the environmental impact associated with new development.

In addition to climate change benefits, historic places can contribute to a strong economy. Rehabilitation projects generate up to 21% more jobs than the same investment in new construction. They're a great stimulus measure, and they typically use local labour and materials, such that 75% of the economic benefits of heritage rehabilitation projects tend to remain in the communities where these buildings are located.

More jobs, action on climate change, and reduced waste all seem like excellent reasons to support Bill C-323. It would have been great for the government to have included funding for this in its budget released earlier this week.

Personally, I was very disappointed that there was no money in the government's 2018-2019 budget to fund a national home energy retrofit program across Canada for homes in general and nothing for heritage homes either.

Mr. Chris Wiebe, the manager of heritage policy and government relations at the National Trust, reiterated the organization's support for this legislation. He said:

First, we would recommend implementation of a federal heritage rehabilitation tax incentive, such as the measures recently proposed in Bill C-323. That is a proven way to attract private and corporate investment to privately owned historic places and to give them vibrant new uses. Two, the government could consider extending a rehabilitation tax credit to heritage homeowners to get even more impact. Three, federal investment in seed funding for creative financing mechanisms like crowdfunding could help many more charities and not-for-profits attract private donations and would save and renew some of the thousands of other heritage buildings that make up the fabric of our communities. Finally, an increase in federal cost-shared funding available for the national historic sites heritage places program would help turn the tide of neglect for these important national icons as well.

While Bill C-323 would not answer all of these questions, it would be a good start toward supporting Canadian heritage. In fact, when the environment and sustainable development committee, which I sat on, made its recommendations to the House of Commons on these matters, it spoke directly to the need for a tax credit. The committee tabled its 10th report entitled “Preserving Canada's Heritage: the Foundation for Tomorrow”, in December 2017, just two short months ago. Recommendation no. 11 of that report said:

The Committee recommends that the federal government establish a tax credit for the restoration and preservation of buildings listed on the Canadian Register of Historic Places.

That would appear to be a slam dunk for Bill C-323. The committee recommends a tax credit for heritage building restoration and preservation. A bill comes before the committee that does exactly that, yet the Liberals on the committee went against their own recommendations and voted to kill the legislation. They forced through a report that recommended that the House stop dealing with Bill C-323. If those members of Parliament received anywhere near as much correspondence supporting the bill as I did, I have to say that their constituents will be very disappointed. Still, we have a chance to pass the proposed legislation at third reading, and I call upon all members of the House to support it.

Members may be interested in knowing what else the committee recommended on the issue of built heritage. Recommendation 12 of the report says:

The Committee recommends that the federal government, in co-operation with provincial and territorial governments, work to adapt future versions of Canada’s National Model Building Codes in a manner that will facilitate the restoration and the rehabilitation of existing buildings and the preservation of their heritage characteristics.

This is important, because old buildings do not easily adapt to new building codes. One example, given by Mr. Robert Eisenberg at York Heritage Properties, is that adding insulation to the roofs of older buildings increases snow load in the winter because heat no longer escapes through the roof to melt the snow, thus threatening the building's structural integrity.

The committee spent time looking at issues specific to rural areas, like my riding of Kootenay—Columbia, resulting in recommendation 13, which reads:

The Committee recommends that Parks Canada review its National Cost-Sharing Program and, if it is determined that rural sites are under-represented in applications for funding or in the awarding of funding, steps should be taken to improve the program.

Rural areas have specific struggles when it comes to preserving heritage buildings. In particular, there is sometimes a lack of specialized craftspeople and specialty materials available locally, and the cost to bring them in from bigger cities is prohibitive. That is why heritage buildings in many rural areas are left to fall into neglect. I am very fortunate in my riding of Kootenay—Columbia to have a number of very skilled tradespeople who are ready, willing, and able to rehabilitate heritage homes.

While recommendation 13 did not address the need for a tax credit directly, it is clear that the passage of Bill C-323 would be particularly valuable in rural areas like mine. Finally, heritage building owners would be able to afford the additional expenses required to restore these important buildings.

I wish to finish my remarks today by reading from a January 2017 letter I received from the City of Nelson that asked me to support Bill C-323. The City of Nelson said that these tax measures could transform the economic fundamentals for renewing historic places and encourage building conservation of every size and type, from landmark commercial buildings to modest homes.

I agree and that is why we will be voting in support of Bill C-323.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, I am proud to rise in the House as the sponsor of Bill C-323, which had the potential to revitalize our heritage sector to preserve Canada's built heritage, something that has had erosion. We are very much a product of what has come before us. Our cities, the places where we live, our small communities are defined by the buildings that are there, but we have lost far too much over Canada's history.

Bill C-323 was a bipartisan effort that was worked on together with members of the Liberal Party and other parties to ensure that something that had been asked for and sought for years and years, and worked on by governments, Liberal and Conservative, behind the scenes, could finally come to fruition through a proper tax credit scheme that would allow for the preservation of our heritage buildings.

Our heritage buildings define communities. They create economic growth. They improve our quality of life. They build social capital. They give people a reason to appreciate where they are, to go to special places, and to make special places.

It is therefore very disappointing to see this report from the environment committee with regard to Bill C-323, particularly in view of the bipartisan support it had in the beginning.

Initially, I worked with members of the Liberal Party and others to develop the bill and get it supported in the House of Commons. It would have created specific tax incentives on eligible heritage restoration work done to designated heritage buildings. Specifically, there would have been a 20% tax credit for rehabilitation and restoration work done to a designated heritage building. The work would have had to be certified by a registered architect. The bill would also have created an accelerated capital cost allowance for capital costs, again finding a way to create an incentive, with minimal cost to the public purse, for people to restore and preserve buildings instead of demolishing them.

In effect, the bill would have created a heritage policy for Canada that is fair to property owners, whom we in the public sector ask to bear the cost and burden of preserving our heritage through our process of designating their buildings and telling them that we want them saved, yet we do not provide anything on the other side to compensate them for those increased costs. This legislation would have created that impact, and it would have had a positive effect on Canada's national heritage.

The National Trust for Canada, our leading organization on built heritage, estimates that we have lost over 20% of our built heritage in the past 30 years, including buildings like the Edison Hotel in Toronto and the Redpath Mansion. For that reason, the national trust was strongly supportive, and it was one of the collaborative partners we worked with to develop this bill.

In fact, what the member said is entirely, patently untrue. There was enormous consultation with stakeholders, municipalities, etc. that went into the development of the bill. Through that process of consultation, it became evident that heritage means so much to many communities. It creates value for those communities and encourages tourism. It is something all Canadians can enjoy. That is why the bill had so much support.

What support did we have though the consultation? It was across political lines. It was across the nation. It was from individual members of Parliament, from dozens of historical societies, and dozens and dozens of municipalities. The Federation of Canadian Municipalities supported it. The royal society of architects supported it. Provincial governments supported it. I could go on and on.

The suggestion that it did not provide for collaboration with partners shows that whoever wrote that speech had no comprehension of the way heritage designation works, or the way the bill was crafted. In fact, it created a partnership that did not exist up until then among provinces, which set the terms for heritage preservation; municipalities, which make the decisions on which buildings to designate; and, finally, putting into the piece the federal partnership through the support for restoration. There could be nothing better than building a collaborative partnership. That is why I was so pleased to see that partnership build and the bill pass through second reading in the House, with support, it should be noted, from members of every party. It was not all the members of every party in the House, but members from every party in the House supported the bill, including several members of the Liberal Party.

At committee, a consensus emerged that mirrored the consensus across Canada that the bill would have a tremendous positive impact on our heritage built stock, and on the communities we live in. It seemed that all members of the committee were quite supportive. This was evident in their comments and their questions for the witnesses.

The members heard a lot about tax credits elsewhere, including for example the one in the United States, which has had a huge impact in revitalizing inner cities, in creating economic activity, and in creating tourist attractions and hubs where they never were before.

The Urban Land Institute magazine showcases its best projects of the year. Every year it overwhelming shows projects that have at their heart the American version of this heritage tax credit. People saw that it was valuable.

Also in that study they learned that the costs were minimal. In fact, the likely impact on the fiscal framework federally was because of the incentive it created for restoration and the like, and the economic spinoffs and developments that happened. More than any of these other kinds of studies that give us dubious reports on economic impact, this impact would be positive and taxpayers would get far more back than they ever put out, as well as the significant public benefits that would have been derived.

Then something happened. Just before it came time for the committee to vote, the Prime Minister's Office cracked down on its MPs for speaking their minds at committee and for having the temerity to have voted as they saw fit at second reading. Many of them had personally worked on the bill at second reading and to get it through to committee. Despite all of their previous support, Liberal MPs were forced to vote down the bill at committee by the Prime Minister's Office against their will. I understand that one of them was virtually in tears.

Supporters of the bill were understandably disappointed to see the bill voted down. Bill C-323 was an opportunity to refocus our efforts on heritage preservation during the 150th anniversary of Confederation. The policy seemed ideal for the milestone year in our nation's history. Unfortunately, the committee made the decision that we are now considering today.

We heard that in the companion report there was, believe it or not, a recommendation for tax credits like this. However, the criticism was, as we just heard in the speech from the government, that it should be done through the normal budget process. This was the criticism levelled by critics, and that is what was in speeches previously.

This committee report was tabled last year. The budget process continued. The budget was this week. Anybody who suggested to we wait for the budget and the proper budget process misled supporters of the bill, supporters of heritage preservation. No such tax credit was forthcoming. No such policy was forthcoming. It simply did not exist. The story about a budget process was a mere excuse for a government being so miserly and short sighted that it would not allow the more visionary members of a caucus who saw the value in the bill to support it as they had at second reading.

It is not surprising we see this from the Liberal government. I have been fond of noting that it seems to have a bit of a war on history. We saw it in the 150th anniversary of Confederation, where the themes disallowed the observance of the actual event of Confederation or events that celebrated our history. The five themes that were selected were fine. but if we wanted to have any support or assistance or to be part of the federal government's Canada 150 festivities, history and Confederation were not allowed.

This is just one of many examples of how the Liberal government has continued and perpetuated that war on Canadian history.

There was the cancellation of the Canada 150 medals for those people in local historical societies who do so much to build their communities. All of a sudden the opportunity to recognize people like that, people who build Canada, was wiped out. Why? Because the government is committed to a war on history.

There is a American great author who said, “History is who we are and why we are the way we are.” We are losing that here.

There was a great Canadian historian and author with great influence, Canon Lionel Groulx, who said:

No, a nation cannot separate itself from its past any more than a river can separate itself from its source, or sap from the soil whence it arises. No generation is self-sufficient. It can and does happen that a generation does forget its history, or turns its back upon it; such an action is a betrayal of history.

Then of course there was the great Joseph Howe, who resisted Confederation 150 years ago. He then embraced it, and joined the cabinet of Sir. John A. Macdonald later. He noted:

A wise nation preserves its records, gathers up its muniments, decorates tombs of its illustrious dead, repairs great public structures and fosters national pride and love of country by perpetual reference to sacrifices and glories of the past.

That was Joseph Howe in 1871. That is what Bill C-323 would do, and that is why I still encourage some within the Liberal Party to have the courage and conviction to support it, and to reject this report from the committee to turn down Bill C-323.

[Chris Bittle, Liberal, St. Catharines, ON]

Mr. Speaker, I rise to comment on the ninth report of the Standing Committee on Environment and Sustainable Development regarding Bill C-323.

The report is the result of the decision taken last year by this House to refer the bill to committee for further study. Bill C-323 proposes federal tax credits for investments in eligible projects to conserve privately owned heritage properties. During this period, the committee also undertook a robust study of heritage preservation and protection in Canada.

The committee's report, entitled “Preserving Canada's Heritage: The Foundation for Tomorrow”, urges the Government of Canada to better protect and conserve this country's built heritage. Among its 17 recommendations, the report calls for the introduction of financial measures, enhanced federal leadership, and greater collaboration with indigenous peoples.

The Government of Canada welcomes both reports, and I fully support the concurrence motion now before us.

While the end goal of promoting heritage conservation is certainly worthy, the mechanism proposed in Bill C-323 suffers from several significant shortcomings. These shortcomings make it impossible for the standing committee, or for me, to support the proposed legislation.

The standing committee properly points out that Canada must do more to protect its built heritage. As the committee noted, financial incentives that encourage investment in the rehabilitation of historic properties and heritage places have much to offer. The committee, however, identifies many of the fundamental weaknesses in the mechanism proposed in Bill C-323. One such weakness is inherent in any tax changes undertaken outside of the regular budget process. As my hon. colleagues recognize, these types of changes often lead to problems of consistency and coherence in federal fiscal management.

Furthermore, as presented, it is challenging to determine the impact of this bill on federal revenue. Then there are the added costs of administering the tax credit and requisite certification process, along with amending the Income Tax Act.

Other shortcomings of the bill include its lack of an adequate accountability mechanism, and its exclusion of important conservation partners, such as not-for-profit entities, indigenous governments, and municipalities. To me, this lack of inclusivity is serious because it fails to acknowledge a fundamental truth about heritage conservation in our country: it is necessary for it to be a collaborative undertaking.

Bill C-323 was not designed in collaboration with other jurisdictions and partners, and does not properly take into account current conservation tools and approaches. The standing committee emphasizes that for conservation efforts to succeed, they must involve broad collaboration and engagement with other jurisdictions, indigenous groups, stakeholders, and partners.

Our heritage assets are certainly worthy of conservation, and we can and must do a better job of protecting them. To achieve this goal necessarily requires thoughtful, strategic collaboration. Financial measures can be an effective way to support heritage conservation, but only when carefully integrated into a broader framework.

Bill C-323 does not meet this test and does not merit the support of this House. I thank the members of the standing committee for their efforts and fully support the concurrence motion now before us.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

Pursuant to Standing Order 97.1(2), the motion to concur in the ninth report of the Standing Committee on Environment and Sustainable Development, recommendation not to proceed further with Bill C-323, an act to amend the Income Tax Act (rehabilitation of historic property), presented on Thursday, November 30, 2017, is deemed to be proposed.

(On the Order: Motions)

November 30, 2017—Mrs. Schulte (King—Vaughan)—That the Ninth Report of the Standing Committee on Environment and Sustainable Development (recommendation not to proceed further with Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property)), presented on Thursday, November 30, 2017, be concurred in.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, we all agree that the government needs to show some leadership when it comes to heritage conservation. That being said, where we do not agree is how the financial resources are being managed.

One of my Conservative colleagues presented a solution in committee that demonstrated that Bill C-323 did represent a solution, at no cost to the government.

The Liberals rejected this bill. Most of the recommendations meant additional costs. The committee did not take into account the financial implications of these measures in its analysis.

While the objectives of the legislative recommendations are commendable, the Conservative members of the committee believe that it would be irresponsible, considering the huge deficit, to impose these expenses on taxpayers without examining the financial implications.

[Deb Schulte, Liberal, King—Vaughan, ON]

Mr. Speaker, I have the honour to present, in both official languages, the ninth report of the Standing Committee on the Environment and Sustainable Development in relation to Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property).

The committee has studied the bill and recommends not to proceed further with this bill.

[The Chair, Liberal, Deb Schulte]

Seeing no further comments, we'll vote on the motion.

(Motion agreed to)

Thank you. We are done.

I want to thank everybody. Bill C-323 has been interesting, and I'm glad the report is speaking to a lot of the things we want to see move forward. I am very hopeful that we're going to see some progress on this file because it's very important to all of us.

Before we let everybody go, we have a couple of things to settle. The next meeting was to be on Bill C-57. Linda has asked us not to do it on Thursday, so we're going to do the press release and we'll have a discussion about what that's going to look like based on what has happened today. That will be first thing on Thursday.

I want to bring to your attention that we had two amendments to management plans tabled by Minister McKenna. If we want to discuss them, we can. I did ask Mr. Fast. He said that's not necessary. You can let me know if you are interested in talking about those at committee. We can. They're tabled and we have the option to discuss them if we want. It's up to you guys. You can let me know.

On Thursday I think it would be really helpful if we had some discussion on our trip to the GLOBE summit and make sure we have figured out how we're going to move forward on that initiative.

Then on Tuesday, we will start our clause-by-clause work on Bill C-57.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

When I looked at this bill, again, I thought of some of the people I know who own historic buildings. I know we have a report with great recommendations coming forward, but I saw this as an important step in moving in the right direction. From my perspective, I will continue to support Bill C-323. I think it's a good step.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

If you want me to, sure. The motion is:

That the committee report the following to the House: The Committee is supportive of the principle of Bill C-323 and believes that financial incentives, including tax credits, which encourage investment in the rehabilitation of historic properties and heritage places are necessary; however, the committee notes the following concerns with the bill: tax changes undertaken outside the budget process make it more difficult to ensure a coherent and consistent approach to fiscal management; the effect on federal revenue due to the proposed measure with the bill containing no upper limit on the amount which can be claimed for tax purposes with the parliamentary budget officer assessing costs at $55 million to $67 million in the first five years and Department of Finance officials stating it could be as high as $90 million a year; the lack of accountability tools associated with this measure; the restrictive nature of the incentive with not-for-profit entities, indigenous governments, and municipalities being ineligible; the cost to the federal government to administer the proposed changes to the Income Tax Act and the certification of the work being done for the purposes of the tax credit; the incentive not being designed in collaboration with other jurisdictions and partners to ensure its effectiveness; the lack of consultation on this measure with tax experts, as well as those provinces and territories that are a party to the Canadian Register of Historic Places, as well as municipal and indigenous governments; That in light of the above-noted concerns with the bill, the committee, pursuant to Standing Order 97.1, recommends that the House of Commons do not proceed further with Bill C-323, an act to amend the Income Tax Act (rehabilitation of historic property).

We can go through any of the bullets if anyone is interested, but we feel there was testimony as we went through the bill to substantiate the seven bullets that we have outlined here and the concerns.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

As the document is being distributed, I want to say I really appreciated the work Mr. Van Loan did in putting forward this bill. It brought a very positive light to heritage. As we saw, the study we just discussed formed a very important part as we looked at the financial piece to it. I think it's a very important and timely discussion that we have as a government.

That being said, from our side we do have concerns which we've outlined in seven bullets. I'll give people a minute to look at it. Essentially we've tried to capture that we're very supportive of the principles of Bill C-323, but our bottom line is we're not recommending that we proceed at this point. We can go through the bullets once people have digested that.

[The Chair (Mrs. Deborah Schulte (King—Vaughan, Lib.)), Liberal, Deb Schulte]

We're going to reconvene now into our second session which is in public.

Pursuant to the order of reference of Thursday, March 23, 2017, Bill C-323, an act to amend the Income Tax Act (rehabilitation of historic property), we're going into clause-by-clause consideration.

I'm going to call clause 1.

Mr. Aldag.

[Leonard Farber]

I think Bill C-323 certainly addresses any issues in the commercial context. For any buildings that are used for commercial purposes, rental purposes, or anything that generates a stream of income that is taxable, and against which one can claim investment tax credits or refundable investment tax credits, as well as depreciation or capital cost allowance, the bill is very helpful and workable in the commercial context.

For home ownership, I believe a grant mechanism to stimulate that kind of work is what would deliver the necessary results and a similar mechanism for non-profit organizations or charities that have heritage properties that would be important to renovate. We need a mechanism that gets them the capital that they would need in order to do the kind of work that this bill foresees, in terms of heritage property. That's the way to deliver that.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

In your view, Bill C-323 primarily helps larger commercial heritage properties.

[Leonard Farber]

There's nothing in Bill C-323 that would affect home ownership, because these are tax measures, and tax credits in particular, as well as accelerated capital cost allowance, which is only relevant for people who are earning income from property or using that property in their business. Home ownership, which is a non-income tax event, the disposition of which gives rise to the principal residence exemption, is not impacted by that.

In my view, the only way one can stimulate the kinds of results that this bill is looking for in the commercial area is through a grant mechanism, either provincial or federal, whereby similar criteria for heritage quality is used as the basis for stimulating those renovations when home ownership is involved. The tax system can't do that.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Thank you.

In my riding of Kootenay—Columbia, which is located in southeastern B.C., we have a few commercial heritage properties, but by far what we have are homeowners who wanted to live in a heritage home and want to try to maintain that heritage value. It's very much a personal home ownership situation. These are basically middle-class people making middle-class incomes, but they have an appreciation for and want to maintain heritage.

Given your experience with taxes, what do you think is the best way to make sure they can continue to benefit from living in a heritage home but keep up its heritage values? Does Bill C-323 move us in the right direction, and if not, how can it be improved?

Let's go back to the first question, home ownership.

[Govindadeva Bernier]

Thank you very much for your invitation.

As you know, on December 1, 2016, Peter Van Loan introduced a private member’s bill, Bill C-323.

This bill would amend the Income Tax Act to create a 20% tax credit for expenses related to rehabilitating a historic property, and to create a tax deduction for the capital cost of property used in the course of such rehabilitation.

The Office of the Parliamentary Budget Officer based its analysis on data obtained from the Canadian Register of Historic Places pertaining to the number of eligible historic properties, and from Statistics Canada data on the average cost of home repairs and renovation.

We estimated that the annual cost of the credit will range from approximately $55 million to $67 million in the first five years, if the average cost of rehabilitation and the take-up rate of the credit are similar to projects that have been undertaken in the United States, where they have somewhat similar credit, but only for income-producing properties.

As Summary Table 1 shows, large-scale projects, which primarily involve commercial and industrial buildings that are somewhat similar to those eligible for the U.S. tax credit, are the major cost driver of the credit. Although there are fewer large-scale projects, they cost a lot more because their costs are substantially higher than smaller projects. This will have a more significant impact on the total cost of the credit.

While there are also costs associated with implementing the tax deduction for the capital cost of property used in the course of rehabilitation, PBO has deemed that these costs are not fiscally material. If you consult appendix D, in particular table D.2, you'll notice that these costs are below $10 million per year.

As a little note on that, there are two tables in appendix D, tables D.1 and D.2, because at first when we did the costing analysis, the way the bill was written, it was unclear whether the capital cost allowance would be on top of the credit or if the individual had to choose between one or the other. The first table applies if you have to choose between one or the other, while table D.2 applies if the CCA is on top of the credit. Mr. Van Loan's testimony last week made it clear that his intention was that the capital cost allowance would be on top of the credit for the 80% of costs remaining that are not covered by the 20% credit.

That's the end of our presentation.

We are ready to answer any questions you may have.

[Jean-Denis Fréchette, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Madam Chair, Mr. Vice-Chair and members of the committee, thank you for inviting us to appear before you today.

It is the first time that a PBO team has been invited to appear before your committee. As per our legislative mandate, it is our role to support you in your parliamentary debate, and we always appreciate the opportunity to exchange directly with parliamentarians.

We hope that our costing analysis of Bill C-323 will be useful in your future discussion and for your report back to Parliament.

With your authorization, Madam Chair, I would like to ask my colleague Govindadeva—see, I have the same problem.

[The Chair (Mrs. Deborah Schulte (King—Vaughan, Lib.)), Liberal, Deb Schulte]

I call the meeting to order.

We are continuing with our evaluation of Bill C-323, an act to amend the Income Tax Act (rehabilitation of historic property).

I'd like to welcome some guests here today to give us some advice. From the PBO's office, we have Jean-Denis Fréchette, the parliamentary budget officer. Thank you very much for being with us.

We have Mark Mahabir. Thank you very much. You're the director of policy costing and general counsel.

We have Govindadeva Bernier. Thank you for being patient with my pronunciation.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, dear colleague.

I listened to your comments this morning and I must say it is unfortunate that you are not open to finding solutions. We all know there is a problem with the preservation of historic monuments in Canada. Through Bill C-323, my colleague is seeking to make certain provisions for preservation.

We understand that a bill is never perfect and that it will evolve. Our witnesses, particularly from the Department of Finance, raise some big question marks and seem to be closed, which I find disappointing.

You are here as managers, while we are parliamentarians and MPs. Since we wear different hats, I can understand that you have some reservations.

Mr. LeBlanc, I have some questions for you.

You stated in your presentation that one of the benefits of direct funding programs as compared to tax incentives is that they can give the government greater flexibility. They are not mutually exclusive, however. Why are you closed and why do you say that the proposed tax credit is not acceptable and is not the solution? I think it is a possible solution. We know it is not perfect, but that does not mean it should be ruled out.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

You've had a chance to have a look at Bill C-323. In your comments you note that there are shortcomings in its design.

I have a very simple question. Can we fix the shortcomings in our clause-by-clause consideration through amendment or do we need to scrap it and start over?

[Joëlle Montminy, Vice-President, Indigenous Affairs and Cultural Heritage Directorate, Parks Canada Agency]

Yes, thank you very much.

Madam Chair, members of the committee, thank you for this opportunity to discuss Parks Canada's perspective on Bill C-323.

Bill C-323 would create a tax credit for the rehabilitation of historic properties. While its objective is worthwhile, there are shortcomings in its design that may impede its effectiveness with respect to heritage conservation.

Financial incentives can be a useful way to promote the conservation of heritage places. To be most effective, however, they must be carefully designed and properly integrated into a comprehensive and collaborative approach, supported by other Canadian jurisdictions.

In Canada, protection of heritage property not owned by the federal government falls within the purview of provinces and territories. As a result, a range of legislation and incentives exists across the country to protect our heritage places. These efforts are supported by hundreds of community groups who work directly in the conservation and preservation of heritage assets. It is a fact that heritage places are at risk and that their loss would be irreversible.

Through the Parks Canada Agency, Canada protects heritage places of national significance. The agency also works closely with numerous partners to conserve and present our heritage. As the federal lead for heritage conservation, Parks Canada also provides communities across the country with financial support for heritage conservation. I know that we provided information for your previous study in a broader context of heritage conservation.

This is not to say that Canada could not benefit from additional financial incentives; however, the bill makes specific references to accountability tools under Parks Canada’s responsibility without full consideration of some of the implications of these references. For example, the bill relies on Parks Canada’s various accountability tools for heritage conservation. While these tools appear suitable, there are challenges with each of them.

The bill sets out what historic properties would be eligible, including those commemorated under section 3 of the Historic Sites and Monuments Act, as well as properties listed on the Canadian Register of Historic Places. The Canadian register is the only pan-Canadian listing of historic places recognized at the municipal, provincial, territorial, and national levels. As such, it is widely used as a reference in the field of conservation. Unfortunately, the Canadian register is not yet a complete source of information for verifying eligibility as it is only 60% complete.

The bill also specifies that the standards and guidelines adopted and applied by Parks Canada must be followed in undertaking an eligible rehabilitation project. It requires an architect to certify that the work undertaken meets these standards. The “Standards and Guidelines for the Conservation of Historic Places in Canada”, while widely used, offers guidance only and does not set official requirements like a building code. This is why the certification process proposed in the bill raises concerns with the credentials and expertise of certifiers and their objectivity as well as with the timing of certification.

Parks Canada is of the view that the certification function needs to be defined in a comprehensive manner to ensure the consistency of the interpretation and application of the standards and guidelines. What is proposed in the bill is not equivalent to Parks Canada’s certification process, a comprehensive and internal practice that has proven successful in the past.

To conclude, financial incentives are widely recognized as a useful way to promote the conservation of heritage places; however, such incentives must be carefully designed in collaboration with other jurisdictions and partners to ensure their effectiveness. In addition, these incentives must include solid accountability tools.

Thank you.

I will be pleased to answer your questions.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

In that case, use it.

In the meantime, I have to remind my colleague, unfortunately, that we will not be indulging in petty politics on this. I could ask him what has been done in the past 20 years. We could actually go more than 10 years back and look at the past 20 years. That is not the objective of our meeting today though. I think we get along well in this committee and manage to avoid partisanship. We cannot change the past, but we can take action for the future.

You are here to help us, Mr. Van Loan, and the bill is interesting. For my part, I think the concept is good.

I would like to go back to the 20% that you suggest in Bill C-323. Earlier, you mentioned that construction projects that use built heritage are more, what should I say, not profitable, since that is probably not the right term to use, but rather more attractive in terms of commercial development than new construction is.

You know that developers always look at the cost of a project and the return on investment. My question is simple: is the 20% credit enough of a deal maker to entice developers or citizens to develop their project and move forward? In other words, is that 20% credit enough to generate interest?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Thank you very, very much.

Thank you for the work you've already done studying the issue of heritage in Canada, and now today studying this bill.

I also want to start by thanking in particular John Aldag for the fact that we are here discussing this at all. It has, in my view, as much, if not more, to do with him than with me. That, I think, says something about this bill.

I should say a bit about why I chose this as the subject for my bill.

I'm a former House leader. I have no illusions about my ability to count. I knew if I wanted to have something that was going to have any prospects of success, I would have to select a subject matter that was worthy, that was non-partisan in nature, that could do positive things for the country, and that, as a result, could earn support from all sides. This bill is exactly such a bill, and it addresses what I think has been an outstanding policy need in our country for some time. In fact, this bill builds on work that was done previously under both Conservative and Liberal governments but that has never been brought to a satisfactory conclusion. You, as a committee, have an opportunity to complete that work and to fill a very important policy void, at least in part, obviously not in its entirety, that calls out for federal involvement, as I think you heard from many witnesses.

The purpose of Bill C-323 functionally is to establish a tax credit for 20% of the cost of the restoration of heritage buildings. The rest of the cost, the remaining 80%, would then also be able to benefit from an accelerated capital cost allowance, for a three-year writeoff, whereas a normal project of that type might take a little longer to write off under the tax rules.

The tax credit and the accelerated capital cost allowance would apply only to properties that are on the Canadian Register of Historic Places, so in that sense their impact is limited and their scope is limited. As well, the work that was done, the costs for which the benefit of the credit is being sought, would have to be certified by a professional engineer as having followed the “Standards and Guidelines for the Conservation of Historic Places in Canada”, which have been prepared by Parks Canada. It should be noted that both the Canadian Register of Historic Places and the “Standards and Guidelines for Conservation of Historic Places” were developed within the Department of the Environment in anticipation of exactly a tax credit policy such as this, and they are there to support it. So we're in the fortunate position of being able to bring forward legislation for which that infrastructure has already been built in the department with legislation like this in mind.

Why does it matter that we preserve heritage buildings? When we think about the places we like to visit, the places that attract people from around the world, we think of places like London, Rome, St. Petersburg, and Paris. People want to go there because they will be surrounded by beautiful heritage buildings. Those buildings help to define those places. They tell us who we are. They tell our stories. And it's no different here in Canada. In Canada the places we find enjoyable to visit, the places where people want to gather and want to go are overwhelmingly the places with well-maintained and preserved heritage areas. Think of the Distillery District in Toronto or the Old Port in Montreal. Think of quaint small towns, whose main streets you like to visit and shop in. There's a reason for that, which is that those places tell our stories. We feel when we are there that we are absorbing what's gone before us, what has made us what we are, and what a place is all about, in a very physical way.

I think that's one reason it's important. But why take the step forward in terms of a tax credit to help preserve these buildings? The reality is, as anybody who has been involved in owning a heritage building or in a business that's in one knows, that while there's a strong public interest in preserving such buildings and seeing the restoration, there is an extraordinary cost. The cost of preserving a heritage building is usually well in excess of the cost of demolition and new construction of something equivalent. We've lost 20% of our national heritage over recent decades, according to evidence you've heard, because sensible people in business, who look at the cost of restoration and look at the cost of new construction will usually opt for new construction because it is financially advantageous.

When we ask individuals to restore and preserve a heritage building because it's good for society, it's good for the community, we are asking them to assume privately the cost of maintaining what is a public benefit for the entire community. The policy rationale is if we're asking them to bear that public burden privately, it is incumbent upon us to assist them somewhat, in fairness, if we actually want to see those historic buildings preserved. When a heritage designation falls on a property, that is one of the consequences. We put barriers in front of what they can do with it, and so on. Our laws fundamentally respect property rights. Those are not permanent barriers ultimately.

There's always the option of demolition. There's a real cost there. We don't want to see that demolition occur. We want to see the buildings maintained, restored, and become vital parts of the community. That's why the policy rationale for this bill is solid. If we accept that heritage buildings are a value, is this the right approach, correct approach, or positive approach to preserving them?

This tax credit is very much modelled on a U.S. program that you did hear evidence about, the heritage restoration tax credit. That program has been highly successful over recent decades. It's a rare program that actually returns more to the public purse than it takes away from the public purse. There have been abundant studies to that effect. You heard about the Rutgers study that regularly looks at it on an annual basis, and calculates that for every dollar impact on the public purse in terms of a credit going out, $1.25 or more gets returned to the public purse every year in the United States.

I'm often skeptical of these kinds of arguments because anybody who has been.... I think of Mark here. As a mayor he probably had all kinds of economic input. The basic rationale tends to be that if you just spent all the money there was in the world, we'd all be millionaires, because that's the kind of economic impacts these people put in front of you. This is actually a different kind of case. These have been so clearly studied and the results are so apparent.

I look at the Urban Land Institute which operates here in Canada as well as in the United States, and also around the world. It puts out a quarterly magazine. I was looking through it about six months ago, as we were working on this bill, for totally separate reasons just because of my interest in these things. What struck me was that it was an edition where it focused on all the top projects in North America. Virtually every single one in the United States that was a success story had taken a derelict downtown area and made it into a vibrant hub of commercial, economic, retail, and entertainment activity where people wanted to go. Almost every single one involved heritage restoration and a heritage restoration tax credit.

These have all been showcased as the best projects in the country. The fact that the restoration tax credit was present in virtually every one of them spoke volumes to me in a country like the United States where there's no real kind of planning push against suburbanization like we have here. I saw in that the very real economic impact that was occurring.

In the U.S., about $1 billion a year is spent on these credits, or at least those are the benefits that go out in the credits. They tend to generate about $5 billion a year in economic activity, and about $1.25 billion a year goes back to the public purse. They're netting out in a positive result to the public purse. That's very significant, and the evidence is there, as I said, from the Rutgers study and elsewhere.

In Canada, we've had a little bit of an example. We had a trial program which was a grant-based program, but Deloitte did some work reviewing its success in looking forward to a tax credit program. By its projections, we would have a similar kind of return here based on the evidence in front of you from witnesses between $1.25 to $1.90 for each dollar that would be a credit impact. You would have that much going back to the public purse. There would actually be a net gain.

It's not the only place where that's happened. I use the analogy, and some people have said this is a boutique tax credit. In fact, I put more on the grounds of something like the science, research and experimental development tax credit, a tax credit that we engage in the society, because we want to encourage certain economic activity that's desirable to make our economy and our country a better place. In Canada, that's about $4 billion a year, I believe. About 85% of our research and development spending goes out through that credit. It's done by the government, because we believe it is a worthy way of encouraging desirable economic activity that makes our country stronger and creates economic growth. If you're talking about analogies, that is the strongest analogy to that kind of a tax credit, the SR and ED credit compared with what we are talking about here.

I want to draw your attention to an amendment that needs to be made here. It is only in the French-language version, at line 11, on page 3. Right now, the way it reads, the way it was originally drafted, basically the effect is that the capital cost allowance would be applied against income tax payable, rather than deducted from your income from which tax payable would be calculated, so you'd be getting two credits instead of an accelerated capital cost allowance. We need to correct that, so we're asking

that Bill C-323, in clause 1, be amended by replacing, in the French version, line 11 on page 3, with the following:

déductible dans le calcul du revenu d'un contri-

The way it would be calculated, the capital cost allowance goes against the revenue that's going to be taxed.

I'm happy to take as many questions as you have.

[The Chair (Mrs. Deborah Schulte (King—Vaughan, Lib.)), Liberal, Deb Schulte]

Good morning, everyone. Welcome.

Pursuant to the order of reference of Thursday, March 23, the committee commences consideration of Bill C-323, an act to amend the Income Tax Act (rehabilitation of historic property). As the summary says, this enactment would amend the Income Tax Act to establish a tax credit for expenses related to the rehabilitation of historic property. It also establishes a tax deduction for the capital cost of property used in the course of such a rehabilitation.

I would like to welcome Honourable Peter Van Loan to the table. If you're good to go, we'll open the floor to you.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Just to clarify, Bill C-323 just talks about heritage properties, so I guess at some point we'll get into a discussion about private residences versus commercial, if we go there.

Mr. Archambault, I'll ask you the same question. What is the number one thing that we could recommend to help heritage in Canada from your perspective?

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Thank you, Madam Chair.

I have three questions for you, Mr. Eisenberg, if I can. We're looking at Bill C-323, which is looking at providing tax credits for private residences to encourage preservation of heritage. Tax credits always cost the government money. One of the things I've been thinking about is whether we should potentially cap the amount an individual can claim for a tax credit. It could be $50,000, it could be $100,000, or perhaps you could have it linked to income testing. I'm curious as to whether a person who is a millionaire and who owns a million-dollar heritage home actually needs a tax credit.

I'm interested in your view on, first, that concept of tax credits, and second, who it should apply to.

[Jacques Archambault]

I am sorry, my presentation really was very short.

The first point is about Bill C-323, which proposes tax incentives for private owners. Measures like that would encourage and help a lot of people. The measures should be widely available to all private owners of heritage properties, such as houses, mills, lighthouses or industrial buildings.

Ten or so years ago, a federal government program provided assistance for renovating houses. I was able to take advantage of it and it helped me a lot. If a similar program could be established for heritage houses, that often cost two to four times more than a normal house, it would be a great help.

If they do a quick calculation on the return on investment, real estate developers have little incentive to preserve a heritage house. We have even seen a number of cases in Quebec where they have deliberately been made to disappear. If they could have financial or tax incentives, real estate developers would realize, when they did the math, that it may be advantageous to incorporate a heritage building into their real estate projects or to preserve it.

The idea of historic or heritage property has to be broadened beyond the list in the Canadian Register of Historic Places. The list is very helpful, but it is not complete because it does not include certain buildings.

The department could become a leader in supporting heritage by working together with the various levels of government to establish things like tax incentives. Heritage Montreal, with the appropriate ministry in Quebec, has been working for 10 years to create tax incentives along the lines of the examples in the United States. The National Trust for Canada has also been working on it for a long time.

So other departments must be encouraged to safeguard heritage, but also municipalities, which derive tax revenue from new projects. Clearly, a heritage building brings a municipality much less in taxes than 100 condos in a single building. So all levels of government must support those who are working to safeguard our heritage.

This year, Parks Canada's national cost-sharing program for heritage places has been given $10 million. We have gone from nothing to $1 million and now to $10 million. That is a help, but, one day, we are going to have to stabilize that funding because a lot of people involved with heritage buildings in Canada need support.

Organizations that raise funds also have to be supported. In Canada, fundraising initiatives to preserve natural sites, and other places, have matching gift programs. Natural sites are our natural heritage. If there were similar programs for cultural heritage, it would help organizations like ours that have to raise funds to pay for restoration projects costing hundreds of thousands of dollars, even a million.

The gifts we receive are $30 and $35 at a time. A quick calculation makes you realize that we need a lot of $30 and $35 gifts to raise hundreds of thousands of dollars. It means contacting a lot of people.

In Canada, organizations are putting a lot of effort into conserving heritage buildings, but they are not being recognized. Even in Quebec's Cultural Heritage Act, those organizations are not mentioned. However, a number of organizations like ours are working to conserve heritage buildings and support other owners in their conservation efforts.

In broad terms, those are the points I wanted to bring up. I hope I have given you enough detail.

[Jacques Archambault, Executive Director, The Canadian Heritage of Quebec]

Good afternoon.

First of all, I would like to thank the members of the committee for the invitation and for giving me the opportunity to discuss the status of heritage conservation in Canada.

I am here to make a brief presentation on heritage in Quebec and to provide suggestions from our organization. The organization is called The Canadian Heritage of Quebec, or CHQ. It is a provincial non-profit and non-governmental organization at the service of heritage in Quebec for more than six decades, more than 60 years.

In those 60-plus years since 1956, the volunteers on our board have been working to preserve about 30 heritage buildings and natural sites in Quebec. In the past, we had some in Ontario. Most of our properties were bought with money from our volunteers or our founders.

The conservation work is done with the equivalent of one and a half employees, a miller, and, of course, many volunteers and artisan-caretakers. We also have partnerships with local, regional, provincial, and even national groups, like the Nature Conservancy of Canada.

The long-term conservation of the CHQ properties is made possible by various heritage protection initiatives, both tangible and intangible, implemented by municipal, provincial or federal governments. For us, that includes a national historic site and a building in Westmount. In other cases, the long-term conservation of CHQ properties is done directly by our organization, to the extent we are able. But, unfortunately, we are running up against serious limitations. In Quebec, there is no mutual servitude to protect for owners, as is the case in Ontario.

CHQ receives no ongoing grants for our annual operations, but we do take advantage of the Young Canada Works program, which allows us to hire two summer students, in two of our 16 properties. Mainly, we fund our conservation activities through donations from the public, from foundations, and from income that we generate ourselves by selling flour from our mill, and by renting out our houses during the summer season, such as Sir John A. Macdonald's summer home in Rivière-du-Loup, which we turn into tourist accommodation for two months per year. The house was officially designated a national historic site in 2015. Some of our sites are also open to the public on payment of a small entry fee.

Conserving heritage buildings is becoming more and more difficult, expensive and complicated. This is the result of requirements and constraints on the owners from government legislation and regulations involving various ministries and sometimes different levels of government.

Restoration projects are very expensive for us, costing hundreds of thousands of dollars, even a million dollars. Sometimes, we receive grants for some restoration projects from the Quebec ministry of culture and communications, sometimes as a joint venture with major cities like Montreal. In theory, in some cases, those grants can cover 40% or 50% of the construction costs, but in fact, the overall cost is much higher, meaning that the percentage of the grant, at its highest, drops to more like 30% and 35%. The percentage also varies depending on the amounts available in the program.

I must mention that, in recent years, we have also obtained some grants for certain development projects, coming either from provincial or federal level, one of which was for a virtual exhibition on Sir John A. and Lady Macdonald. We appreciate that a great deal and are grateful to the Department of Canadian Heritage for it.

Nevertheless, the result is that the CHQ has to resort to fundraising in order to find the hundreds of thousands of dollars we need for our restoration and development projects. That is very difficult and requires years of work, since fundraising is a highly competitive market. This is not to mention that, in the recent past, certain actions on the part of the provincial government have caused us to lose tens of thousands of dollars in revenue, with additional losses already anticipated in the coming years.

In addition, the complexity, the work required, the short timelines and the costs needed to apply for grants has, on a number of occasions, deterred us from starting the process, since the anticipated result was less than convincing. That was the case with the John A. Macdonald House and Parks Canada's national cost-sharing program for heritage sites. In 2015, the entire envelope was $1 million for all of Canada with a maximum of $200,000 per project. Our restoration project was estimated at $200,000 and, according to the department's official, we needed a project with demonstrated urgency, in a very competitive, Canada-wide situation. We also had to ask professionals to prepare research, analyses, reports, plans and estimates, all for a grant that would probably be less than $5,000. Moreover, at that point, it seemed that very few projects would receive the 50% maximum that the program indicated. It turned out to be less than that.

By good luck, by help from a volunteer member of our board, and by virtue of our fundraising efforts, we were able to get some significant donations from some donors and, after a few years, we were able to complete a first phase of the project. Today, we still have to find more than $100,000 so that we can finish it. This is only one building from the 25 that we own.

All that fundraising activity, stretched over a number of years, threatens the proper conservation of the buildings in the medium and long term. Sometimes, it even exacerbates an existing problem and makes it more expensive to fix. So preservation, building maintenance or upkeep, is crucial in the process of conserving a building.

There is no support for that, no grants. What is more, our craftsmen, whom we call our “artisan-caretakers” can no longer do all the work required, because of new government regulations.

So the costs of preservation have doubled or sometimes tripled in the last three years. However, preservation is what prolongs the life of the building and reduces restoration costs. It all complicates our work and our mandate to conserve the built heritage. We often have to choose between investing in conservation or in development.

Faced with that complex situation, and after more than 60 years in existence, our organization began a strategic review of its properties at the beginning of 2017, in order to decide which would be kept and which would be disposed of, sold or transferred, if that is possible, to other institutions, organizations or individuals.

Let us now look at the dynamics of conservation in Quebec. In recent years, a number of heritage buildings have been demolished by property developers to make room for new housing projects, condos, or commercial buildings. There are few incentives to encourage those developers to conserve and incorporate heritage buildings into their development projects. Some financial assistance could encourage them to move towards conserving and rehabilitating heritage buildings.

For private owners, the situation is similarly difficult. A number of them want to conserve the heritage value of their property, to preserve it, to rehabilitate it and to restore it for the benefit of the community—it may be houses, mills, lighthouses, or industrial buildings. However, once more, the high costs of restoration, added to the complexity of grant applications, are deterring them.

So they must also be encouraged in their desire for conservation by financial assistance. The added market value of a restored house has not been proven; the opposite even seems to be the case, at times.

In Quebec, a number of non-profit organizations are trying to support, encourage and guide private owners in good conservation practices. Those organizations are sorely lacking in resources and basically count on volunteers, thereby limiting their mission and their activity. In the last three years, the few grants that some of them were receiving in operating assistance have been cut, making the situation even more critical.

In fact, our organization regularly receives calls from the public and, sometimes, from organizations, including municipalities, looking for support so that their heritage buildings can be conserved.

In 2012, the Cultural Heritage Act was passed in Quebec, transferring to municipalities and to the public more responsibility for safeguarding the heritage, but without the resources and the expertise required. So today, the organizations are called on more than previously to conserve the heritage.

Three years ago now, a dozen or so organizations established the Table de concertation des acteurs nationaux en patrimoine bâti du Québec, in order to discuss their challenges and their common issues, and to provide each other with mutual support. Next November 1, the first national summit on Quebec's built heritage will be held in Montreal, and you are all cordially invited.

I will now provide you with some observations and suggestions for encouraging owners, organizations and individuals. The federal government could implement a tax incentive, as in Bill C-323. That initiative should apply to all private owners by extending it to property developers. The notion of historic or heritage property should be expanded, without simply relying on the lists in the Canadian Register of Historic Places. Your department should become a leader in supporting heritage in the various communities across Canada. The amount available in the national cost-sharing program for heritage sites should be increased and stabilized in the coming years. A program should be developed to support and participate in multiplier effects—by which I mean the matching of donations—for organizers and individuals raising funds for heritage. They should be encouraged and supported by formally recognizing the efforts of, and the considerable role played by, non-profit and non-governmental organizations and private owners. Finally, recognize the preservation of built heritage with a specific horizontal status through all federal departments, perhaps also in concert with the provinces and territories. All this would ease the important work being done for Canada's heritage and would act as an anchor for the concept of Canadian identity.

Canadian heritage knows no provincial borders. That is actually the reason that our founders chose Canadian Heritage of Quebec for our organization's name.

Thank you.

Architecture

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, today marks World Architecture Day. Architects make the framework of our lives and architects dream the future of where we live, work, and play. When architects dream well, their work becomes part of the story of our lives.

Preserving our built heritage benefits all Canadians. That is why I introduced Bill C-323, which would create a tax incentive for Canadians who restore and rehabilitate their heritage properties. This bill has the support of the Royal Architectural Institute of Canada, which said it was good news and an opportunity for all members of all political parties to support the retention of Canada's historic buildings.

Canadians care about outstanding architecture around them. We are worse off when magnificent buildings are demolished or neglected. We now have an opportunity to support Canadians working to preserve historic buildings so they can be enjoyed by generations to come.

On World Architecture Day, I encourage all members to help preserve our built heritage and support Bill C-323

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

That would be great.

I have a quick question for you, Mr. Smith. Did you say that the tax credit should focus only on income-producing properties, or don't forget income-producing properties when we come to Bill C-323?

[Chris Wiebe, Manager, Heritage Policy and Government Relations, National Trust for Canada, As an Individual]

Sure.

Thank you very much for this opportunity, and thank you for your interest in historic places. The heritage field is diverse, with different ownership circumstances, and the threats and potential solutions are various. I can see that you are grappling with the question of where the federal government can make the greatest difference.

This morning I want to hone in on two areas that haven't really been explored as much in these hearings. Those are commercial heritage properties and properties owned by charities and non-profits. To assist, I have provided a handout detailing some of the existing incentives, and I'll refer to that throughout my presentation.

There are 440,000 pre-1960 commercial buildings in Canada. If we assume that about 5% to 15% of these could potentially be of heritage interest, there would be 22,000 to 66,000 buildings in this class across Canada. This is a substantial group of community-defining buildings on Canada's main streets.

But why do they need incentives in the first place? What are the disincentives that hamper their survival? First let me run through a few of them. Return on investment: heritage rehabilitation is often considered risky because there are unknowns, unlike for construction on bare ground. Construction costs: while some heritage rehabilitation projects cost less, others cost more, and then these ambiguities serve to suppress demand. Then there's financing. The big banks for the most part do not want to be involved in “staged” investments and are not prepared for the risks that come with adapting older buildings. There's some discussion around rural areas, in that they will not invest in older buildings in smaller communities at all. The fourth reason is lack of ease of property development. Investors are often discouraged by real or perceived restrictions on altering heritage properties. Fifth, there is the current federal tax system itself, which presents problems, including the inability to get a clear explanation from tax officials about which types of rehabilitation work are immediately expensable in a given tax year and which must be capitalized. There are also new-construction biases within the GST rules themselves.

So are there good examples of places where incentives have tipped the balance away from these disincentives? As Julian and others have mentioned, in the United States there has been a booming and competitive industry over the past 40 years because of the establishment of federal tax credits there for the rehabilitation of heritage buildings at a 20% level. This program stimulates private investment in abandoned and underperforming properties. Over the years, $24 billion in credits have generated more than $28 billion in federal tax revenue, and leveraged $131 billion in private investment, an impressive number. This is a 5:1 ratio of private investment to tax credits, and it has created 2.5 million jobs and preserved 42,000 historic properties.

It's important to note that there has been tremendous rural impact from this program over the past 15 years. Over 40% of U.S. tax credit projects are located in communities with populations of less than 25,000.

If you refer to the chart I provided, the one with the five circles on it, you can see that the larger projects typically have a limited ratio of incentives available as a result of caps on programs. I've chosen the $2.2 million level for a commercial project because that was the average cost of the CHPIF, commercial heritage properties incentive fund, projects back in the mid-2000s.

By comparison, have a look at the pie on the right; with all three levels of government in the United States contributing, the picture is very different. Federal tax credits of 20% can be stacked with state credits for a combined 40% to 45%. You should note that 34 states out of the 50 have these stackable credits.

My consultation across the country has shown that it is on these larger projects, those of two and a half million dollars and things of that nature, that a tax credit is needed. For example, the Farnam Block on Broadway Avenue in Saskatoon was demolished in 2015. Repair costs were estimated at $700,000. The city was able to bring forward only $150,000, and the building came down. Or take something like the Calgary Brewing and Malting site, which is sort of like the Distillery District in Toronto in the making. It's languishing for lack of a substantial incentive to give it some velocity.

What can the federal government do? Essentially there are only two mechanisms for the federal government to intervene in the commercial property market, and those are income tax measures or grants and contributions. You've heard about the CHPIF fund and its success as a pilot program for a tax credit program. Analysis by Deloitte and Ernst & Young concluded that refundable tax credits would be more effective than would a grant program. A refundable tax credit offers a number of advantages to the private sector that a contribution program does not. It offers predictability and timeliness. Contribution programs often require more than double the time for approvals on the front end. It leverages existing familiarity with the tax system, creating investor confidence. It also offers flexibility: it works well for large or small projects.

Understandably, the potential cost of implementing a tax credit has been raised at this committee. Deloitte's analysis of the estimated cost of a historic rehabilitation tax credit in Canada found that, far from being a cost to government, these tax credits for commercial properties would create net revenue growth from corporate income tax, GST, and additional personal income tax stemming from new employment.

When we model for a universe of 22,000 commercial properties, we see that these tax credits cost $3.8 million in year two and $55 million in year five. However, these credits generate net revenue growth of $3.4 million in year two, rising to $14 million by year five. The modelling for a universe of 66,000 commercial properties follows a similar trajectory. For broader impact, the government could consider extending a rehabilitation tax credit to heritage homeowners, like that introduced by Bill C-323.

Let's shift quickly to not-for-profit and residential buildings. Tens of thousands of heritage buildings in Canada would not benefit from a tax-based measure because they are not used for revenue-producing purposes. Such heritage buildings include places of worship, historic house museums, and former residential schools.

If you look at the other side of my handout, with the three circles on it, you'll see a sample of incentives from a number of cities. Let me remind you that each of these shows the best-case scenario for grants or tax breaks, but these are often limited by annual budgets for granting programs, such as in Nanaimo, where there is a limited amount every year, and in Halifax, where there is the same situation. We wanted to be fair, so we wanted to have the best possible scenario there.

At current levels, these incentives are not game-changing or behaviour-changing. We are hearing that they are helping already-willing owners but not pushing others. You will notice that the federal government is missing from this incentives picture, and there is no dedicated fund for places outside of the national cost-sharing program for historic places, as these are only for national historic sites, including heritage railway stations and lighthouses.

Competition for mainstream federal funding is fierce. For example, the Canada 150 community infrastructure program requires not-for-profits with modest heritage projects to compete with those with projects for arenas, pools, and sports fields. Earlier this year, FedDev's website reported 1,100 applications, requesting more than $260 million in funding, for their first intake—almost six times more than the available funding. It's a difficult environment for heritage places to get heard in.

Here are the two things the federal government can do to ameliorate the situation for non-profit buildings. The first is to create a source of federal matching funds to leverage investment by other governments. Corporations and individuals could actually help encourage this kind of philanthropy. Funding could be distributed using modern approaches like crowdfunding, which is currently being used successfully by places like National Trust for Canada under the banner of This Place Matters. Over the past three years, the trust's investment of $300,000 has leveraged over $1.1 million in donations for heritage sites. Similarly, Save America's Treasures was a decade-long program in the United States that invested $318 million in federal funds to leverage $400 million from private sources, resulting in the preservation of 1,200 important historic structures and 16,000 jobs. There are also Canadian precedents for using federal matching funds in this way, including the Department of Canadian Heritage's existing matching donations program, which is restricted to endowment matching and for which only arts organizations are eligible, or the government's response to Syrian refugees or disasters and crises.

The second thing the government could do is to provide steady increased funding for the national cost-sharing program for heritage places. I think this has been mentioned on other occasions. The available funding has ranged from zero dollars for some years to as little as $1 million for other years. The current $10 million per year for this year and next year is an important piece of the puzzle, but there are more than 700 properties eligible, and many have been underfunded for decades, so $10 million per year is really a drop in the bucket. The program is already heavily oversubscribed, as Parks Canada mentioned the other day. By contrast, the Canada cultural spaces fund recently received $84 million a year for two years, so there's an order of magnitude there.

In summary, we would recommend the following. First, we would recommend implementation of a federal heritage rehabilitation tax incentive, such as the measures recently proposed in Bill C-323. That is a proven way to attract private and corporate investment to privately owned historic places and to give them vibrant new uses. Two, the government could consider extending a rehabilitation tax credit to heritage homeowners to get more impact. Three, federal investment in seed funding for creative financing mechanisms like crowdfunding could help many more charities and not-for-profits attract private donations and would save and renew some of the thousands of other heritage buildings that make up the fabric of our communities. Finally, an increase in federal cost-shared funding available for the national historic sites heritage places program would help turn the tide of neglect for these important national icons as well.

Thank you very much.

[Julian Smith, Director, Centre for Cultural Landscape, Willowbank, As an Individual]

Thank you very much, Madam Chair. It's an honour to be here.

I'm going to start with some images. The reason I use images is that I sometimes have a hard time explaining how much the field of heritage conservation has changed in the time I've been involved with it, which is now about 50 years.

Here is a drawing of the 1950s. The modernist movement was in full swing. This is when I grew up. This is a modern building and a modern floor plan. But this also shows the hierarchies that existed between blue collar and white collar; between elementary school, high school, B.A., M.A., Ph.D.; the legal system, with yes-no answers to questions; and all kinds of hierarchies that existed. There were the ideas of the nuclear family, the suburb, the prohibition in the U.S. against racial intermarriage, concerns about gay and lesbian couples, and so on.

This next image illustrates the 1960s, when you began to get grassroots movements, both on the left.... I'm using the yellow for the environmental field. People began to protest the loss of wetlands, and the use of DDT. There was Rachel Carson on the heritage side. On the blue side there was Jane Jacobs and The Death and Life of Great American Cities. It was the beginning, again, of a grassroots cultural heritage protection movement. Both environmental heritage and cultural heritage were very grassroots. They didn't fit the system; there were outsiders. This was coming, as I say, from communities.

Next is the 1970s and 1980s. This brings the introduction of heritage legislation and environmental legislation in all the provinces. Those two fields, the environment field and the heritage field, became part of the system. With the laws in place, you began to have lawyers who specialized in environmental law and in heritage law. You began to have B.A., M.A., and Ph.D. programs in environment and in cultural heritage. There was the idea of joining the system and becoming part of these boxes, shown here.

The boxes really also represent the university and the academic system, which classifies knowledge into disciplines and categorizes books in libraries; and also the museum world, which is all about objects and classifying and putting them into systems.

Next comes development in the 1990s, the idea of cultural landscapes, which really was a concern to UNESCO with the World Heritage List. They didn't know how to deal with sites that were important, both from a natural heritage point of view and a cultural heritage point of view. Cultural landscape ideas were about the relationship of people and the natural environment and about human habitat and a more holistic way. They didn't fit the model very well. I think first nations communities began to be much more a part of the conversation about heritage generally, and for them, this nature-culture distinction had always been a problem.

The idea of cultural landscapes really pushed the boundaries and pushed us, as I show in this next image, to I would say the 21st century. I spend all day with 20- and 30-year-olds at Willowbank, where I teach and where I've been the executive director for the last 10 years. This image shows a program for young people interested in questions of human habitat.

I'm going to stop there. I'll leave that image up.

I have some observations. I would say that young people are interested in this kind of ecological and more holistic approach to human habitat. They want to get over the culture-nature distinction, which is so Eurocentric and which has been such a barrier to coming to terms with sustainability. They want planning, development, and design approaches that respect traditional knowledge and existing patterns, and within those, to figure out how you add contemporary layers and levels without simply erasing everything that's there and starting over again.

They want to shift from a utopian view of the world, which is always about monocultures, to a more organic way of development that is more about diversity. They want to knit back together working with hands and working with the mind and overcoming this distinction between design and build, between blue collar and white collar, between intellectual activity...and also between apprenticeship and academic ways of learning. Not only are these people interested in this, but they're demanding it, because they see an urgency to coming to terms with questions of sustainability.

In terms of my observations or offerings to the committee, I would say a couple of things. I want to make reference to Bill C-323, which, in the slides, is back here. This is really a chance for Canada to catch up to where most other countries moved in the nineties, of saying, “We recognize built heritage as being fundamental.”

I would make two observations about it. One is that I would hope the emphasis, if there are tax credits, is on income-producing properties. Among the concerns that have been raised about somebody owning a beautiful historic home in Westmount or Rockcliffe or Shaughnessy or whatever is whether they should be getting a tax credit for work on that house. The idea that the U.S. adopted, that it should be for income-producing properties, has put the focus on tax credits for the rehabilitation of commercial buildings, of main streets in little towns, of urban neighbourhoods, abandoned industrial places. What the statistics show pretty clearly...and we recently completed a study for the UN Habitat Conference in Quito on the North American situation in terms of culture, heritage, and sustainability. Older districts with these older buildings have a richer texture to them. They provide 30% to 40% more employment per square metre of building, they have more minority owners, they have more women owners, they have more young people, they have more age diversity, they are more walkable neighbourhoods, and they have more public transit. These are areas that we need to understand and deal with, and there needs to be encouragement for doing so. It's in income-producing properties that you get the real swings in urban areas that are either going to allow places to continue to exist or not.

The other point I would make is that if you look at the American situation, since they've had so many years—and I'm sure you've heard the statistics about tax credits—you see that those tax credits generate so much other tax revenue. There are very few tax credit programs that have been so productive—seven to ten times the amount of private investment.

There are related things. Federal accommodation should happen in existing buildings, unless there aren't existing buildings available. Federal programs that support seniors housing and low-income housing should prefer existing buildings unless there are none available. This is something the U.S. has been doing for 40 years.

When I practised, very early in my career I was down in the U.S., in Massachusetts. If you wanted to do low-income housing, you had to look for old schools or old abandoned industrial buildings, because they tended to be in downtown areas with good public transit. When I came to Ontario, land value was a key component. In the first project we did, the developer moved the project at the last minute to a farmer's field, because it was cheap land and allowed them to meet the budget. These were low-income people out in the middle of nowhere without transportation.

With these other programs, the national building code needs to be adapted for existing buildings. There are many government initiatives. The environmental assessment process could knit together the culture and nature part of it, and it should be called a sustainability assessment. Unfortunately, when people think of the environment, they think of the natural environment and not the cultural part of it.

At the more general level, if we go to this other image, which is not just about historic buildings, I think we need to engage Canadians, particularly young Canadians, on the question of more sustainable human habitats.

This shows a start. ICOMOS advises UNESCO on cultural heritage, and IUCN on natural heritage. Parks Canada needs to engage in that nature-culture dialogue in a really important way, because Canada is looked at as being a potential leader in the world in this field, and yet we have national historic sites and we have national parks that tend to be two solitudes, as is the case in much of society.

That engagement has to be shared with the non-profit sector. The non-profit sector, when I was growing up, was almost irrelevant—sort of cookie sales, and hat held out to get donations. The non-profit sector has grown remarkably. I've worked part time in the academic sector, the public sector, and the private sector, and in my view the non-profit sector has become a much more important actor in this whole thing.

I think there should be consideration of an agency of the federal government that deals with urban and rural development, partly so that the federal government can connect to municipalities, to townships, to villages, to reserves, to places in which the innovation is happening. This has to be gathered on a national scale in order for Canada to contribute to the dialogue that's happening around the world, which is really a critical dialogue about sustainability. We have to integrate some of the programs with Canadian Heritage, Parks Canada, and Environment Canada so that we deal holistically with the heritage field and with the confluences that these pieces have together.

I'll stop there. I think it's an amazing time. I think we're in a period of transition. If you look at government departments, agencies, and programs, I think they reflect this image. I think we need to move to this one.

Thank you.

[Richard Alway, Chair, Heritage Designations and Programs, Historic Sites and Monuments Board of Canada]

Thank you very much, Madam Chair.

I'm sure members of the committee are used to getting a tremendous amount of information in a short period of time, but information overload, I know, is always a problem on these occasions.

Just to identify myself more completely, I'm actually president of the Pontifical Institute of Mediaeval Studies at the University of Toronto. It was sort of my retirement project when I retired as president of the University of St. Michael's College after almost 20 years, which is federated in and with the University of Toronto. I was asked to do the research institute as a retirement project, but after nine years, I think it's more of a second career.

From your point of view, my role as chair of the Historic Sites and Monuments Board of Canada is the relevant one. The board advises the Minister of Environment and Climate Change, who is the minister responsible for Parks Canada, and the Government of Canada, therefore, on the commemoration of places, persons, and events of national historic significance. It has done this since 1919, when it was founded by an order in council.

I also, at the moment, serve as vice-chair of the advisory committee on the official residences of Canada at the National Capital Commission, and previously I had two terms as CEO and chair of the Ontario Heritage Foundation, now the Ontario Heritage Trust, which is that province's lead agency for the protection, preservation, and promotion of cultural and natural resources of significance.

First of all, I want to congratulate the committee on undertaking this work. It's a great opportunity. I think a report that is broad, comprehensive, yet practical, and that might even have recommendations that would need to be phased, is really what is called for if one can hope for such an outcome. I think it's important to recognize that it was—and it's been mentioned twice already this morning—the 2003 report of the Auditor General that gained the attention of Canadians and focused it on heritage and the threat to Canada's built heritage that existed. It indicated very strongly that two-thirds of Canada's national historic sites in federal ownership were in fair-to-poor condition, many in poor condition. It was very critical of the federal government's described neglect in the area, and it advocated very strongly for a reinforced legal framework for protection, in other words, for legislation.

When the report came out, you may recall, it got a lot of attention. There was a flurry of interest. It didn't last terribly long because there was a lack of a coordinated, coherent response on the part of individuals across the country. Indeed, surveys taken more recently indicate that there is still broad support among Canadians for built heritage generally, but that when it's placed against competing interests from time to time, that's where it loses out.

I think this committee has a chance to be able to promote and analyze the role of heritage within the general cultural framework of the country.

What was the Auditor General's report really based on, and what is the narrative for historic heritage protection in Canada?

Beginning in 1908, the national battlefields of Quebec act was a piece of legislation dealing basically with the Plains of Abraham. In 1919, there was an order in council that founded the Historic Sites and Monuments Board of Canada, which started the program of federal commemoration of nationally significant persons, places, and events. In 1953, the Historic Sites and Monuments Act provided a statutory basis for the federal government to commemorate with plaques and occasional acquisitions—that hasn't happened very often recently—places, persons, and events of national significance.

In 1973, Natalie's organization, Heritage Canada—its original name—was founded by a federal government order in council. In 1982, the federal heritage buildings policy was founded, which does deal with federally owned structures. It asks for a heritage evaluation for all buildings 40 years old and older and for the production of a statement of heritage significance for each building, but there are two things here: one is a sort of registration of buildings and one is classification. For registration, there is basically no significant protection involved, and nothing of significance regarding conservation of the resource. If the building is classified, there is some degree of protection, in that demolition is made fairly difficult, but it's very incomplete.

In 1985 to 1988, as we've heard, the Heritage Railway Stations Protection Act came in, and then the lighthouses in 2008. Both were private members' bills, which is very interesting, but I would note for the interest of the committee that neither involved significant a federal outlay of money, and none involved diverting federal revenue in any way. The finance department is always interested in this. Both those pieces of private member's legislation went through.

Bill C-323, which is very current, of course does involve a tax incentive. It will be interesting to see what happens with that. I certainly would advocate that kind of approach, but I think it's much more difficult to do, particularly as more or less a first step.

What would make great sense today?

First of all, I would say that the legislation to protect federally owned national historic sites, 171 owned by Parks Canada and 65 by other federal departments, should include protections for UNESCO world heritage sites. We go to a great extent to try to add to the Canadian list in this area, as it's thought to be a very good thing, but we offer no guaranteed protection once they're on the list. We're really the only G8 country that doesn't have federal legislation protecting nationally significant places. I think this is a huge gap that could be filled fairly easily, and I suspect the government would be open to that type of recommendation.

It also should ensure any legislation measures to prevent adverse federal action on the over 730 national historic sites that are owned by somebody other than the federal government, some by provinces and most by private individuals. There is only so much one can do, as property rights in Canada, through the BNA Act and the Canadian Constitution, are assigned to provinces and territories. There's a limit here to what the federal government can easily accomplish. I think it is important to have protection for archaeological resources on federal lands and under waters as well.

I think cost-sharing has been mentioned before. The federal provision here was as much as $6 million or $7 million going back to maybe 15 years ago. It declined to $1 million for several years just a few years ago. Now we've had two years at $10 million, but that's about to expire. I think it's important to recommend an extension of cost-sharing, and let's say for five years at a $10-million level. That's as close as one gets to making a program permanent, and I think it's well merited.

Tax incentives would complete the picture of tools here, but I think it's harder to achieve that and I think we need to be practical. I would hope that the committee would sketch out broad recommendations that could carry this area forward into the future in a comprehensive manner, recognizing that some of the recommendations might have to be phased in their execution.

I wish the committee well. You have an important task. I thank you for the opportunity to say my piece.

[Natalie Bull, Executive Director, National Trust for Canada]

Madam Chair, members of the committee, thank you so much for this opportunity. Thank you for your interest in historic places and for undertaking this milestone study.

I'm here today representing the National Trust for Canada, a national membership-based, not-for-profit, non-government organization and registered charity established in 1973. As part of a global network of national trusts, we provide tools and resources to citizens to help them save places that matter, and we inspire Canadians with great places to live, work, and play. We are a proud partner with government in programs including Young Canada Works and Canada Historic Places Day.

In the 30 years between 1970 and 2000, Canada lost more than 20% of its historic buildings. Losses continue apace today. Provinces, territories, and municipal governments are doing their part. Federal leadership is urgently needed.

In this presentation I will do my best to provide an overview of historic places in Canada, review the challenges faced by those who try to save and renew them, and offer recommendations for federal leadership. We are talking about a broad range of places owned or managed by at least four different types of owners. Taken together, the places owned by NGOs and charities, private owners, provincial and municipal governments, and the federal government make up a potential universe of many thousands of historic places, perhaps half a million or more. Some of these places are already designated, usually by a municipal bylaw established under a provincial heritage act. Thirteen thousand are currently listed on the Canadian register of historic places, an important national databank and reference.

Designation often brings with it some access to financial incentives—grants, tax measures, and other sweeteners—offered as a carrot to compensate for the inconvenience or extra cost associated with heritage compliance. Indeed, the carrot and the stick are at the heart of most jurisdictions' heritage strategies. We know that incentives are rarely available in amounts sufficient to influence an unwilling owner's decision to invest or demolish, and heritage designation generally does not bring absolute protection against demolition. The protection of historic places is a challenging business.

Why would a parliamentary committee be concerned with the state of historic places in Canada? I think there are lots of great reasons. For a start, there is the potential for positive impacts on climate change. Canada's buildings are the third-largest greenhouse gas emitting sector, and the reuse and renewal of heritage buildings capitalizes on materials and energy already invested, reduces construction and demolition waste, and avoids the environmental impact associated with new development.

In addition to climate change benefits, historic places can contribute to a strong economy. Rehabilitation projects generate up to 21% more jobs than the same investment in new construction. They're a great stimulus measure, and they typically use local labour and materials, such that 75% of the economic benefits of heritage rehabilitation projects tend to remain in the communities where these buildings are located. This is a great stimulus measure. A related economic impact comes from cultural tourism. For example, U.S. travellers seeking heritage experiences in Canada are expected to reach 12 million by the year 2025.

These places also matter to our national identity, and they have a social value, often as the last bastions of affordable housing or a low-cost base for start-ups. However, there are many barriers and disincentives that make it difficult for private sector owners to save and renew historic places, including rising land values in big cities that encourage owners to demolish existing buildings in order to maximize development on the site, and an often unpredictable bottom line, which can deter developers and even lenders. There are insufficient incentives to counteract these barriers, so we lose buildings like the 1898 Etzio building in Edmonton's Old Strathcona district, the landmark Stollery's department store at Yonge and Bloor in Toronto, and Ottawa's Somerset House, where we witnessed demolition by neglect.

NGOs and charities working to maintain and renew historic places also face financial barriers. Competition for grant funding is fierce. Just last week, after decades of effort, the building rehabilitation society in Guysborough County, Nova Scotia, was forced to accept the demolition of the 1888 Hazel Hill Commercial Cable Building, where the message of the sinking of the Titanic first reached land.

The only federal funding program dedicated to historic places is the cost-share program for national historic sites, federally designated railway stations, and lighthouses, as Joëlle described, but it is limited to just a few hundred places and they're not-for-profit owners. The funding available has ranged from zero dollars for many years to as little as $1 million a year, and the current $20 million over two years has been a really important boon, but we're very concerned about the notion of it returning to just $1 million next year.

What is the federal role in heritage conservation? Canada needs policies that create a strong economy, protect the environment, and avoid climate impacts. Recycling and reusing existing buildings, our largest consumer good, offers a great opportunity for the federal government to achieve these goals. Interjurisdictional collaboration is needed with the province and territories to develop pan-Canadian standards and explore the opportunity for stackable grants and incentives. Many instinctively look to the Department of Canadian Heritage to lead this charge with its many programs that fund, stimulate, and support a vast network of museums, culture, and heritage organizations, but historic places are not generally accommodated in its programs. According to its agency act, it is Parks Canada that has responsibility for historic places in Canada, reporting to the Minister of the Environment. It is confusing for the average heritage advocate, and frankly I would be very happy to see both ministries increasingly embrace the challenges and offer solutions for historic places.

In closing, I would like to offer the Government of Canada a series of priority actions that would do much to support the conservation of historic places inside and outside the federal family, and this is the framework that I think Joëlle referred to as well.

Number one, the federal government can join municipalities, provinces, and territories in offering much needed incentives to attract investment. A range of approaches may be appropriate to reflect the different ownership types and property types. For example, a predictable go-to source of federal matching funds like the cost-share program works well for heritage properties owned by charities and non-profits. Consideration might be given to a mechanism where donations by private individuals and corporations are matched by the federal government as an interesting way to encourage philanthropy. A federal rehabilitation tax incentive like measures recently proposed in Bill C-323 is a proven way to attract corporate investment to revenue-generating historic places, and gives older buildings vibrant, new uses. There's a range of mechanisms available to consider.

Number two, the government can implement two simple federal measures that would have broad benefit for historic places inside and outside the federal inventory. First, a “heritage first” policy requiring government departments to give priority to federal heritage buildings, or even those owned by others, before opting for new construction or leases to fill federal space needs. These measures could help create a new market for heritage buildings overnight. I know a local developer who says that such a measure would really transform the landscape for historic places in Canada. Second, a “do no harm” policy would be interesting to consider the impact of federal actions on all places in the Canadian register of historic places, regardless of ownership. This would help ensure that when the federal government spends infrastructure dollars, for example, they aren't used to the detriment of existing cultural resources. We know that funding for new convention centres, new roads, and infrastructure can sometimes displace important historic places.

Number three, the government can get the federal House in order and be an exemplary heritage steward. Canada is the only G8 nation without laws to protect historic places owned by its national government. As Joëlle mentioned again, in November 2003, the Auditor General of Canada assessed heritage protection practices within several federal departments and agencies and reported that built heritage under federal control will be lost to future generations unless action to protect it is taken soon. Very little has changed since that date. I refer you to the Auditor General's report and urge you to consider a range of measures including statutory protection of historic places on federal lands, national historic sites, and world heritage sites in the federal inventory, and statutory protection of archaeological resources on or under federal lands and waters.

Number four, the federal government can facilitate full participation of indigenous peoples in the identification and protection of their historic places.

Finally, the government can ensure that the Canadian register of historic places and the “Standards and Guidelines for the Conservation of Historic Places in Canada” are enshrined in legislation and adequately funded because they are the essential building blocks and underpinning for all of the recommendations listed above.

Thank you so much for your interest and for your action on historic places.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

What I had envisioned in the structure of this would be to orchestrate one or two sessions; the way it's laid out now is two. One would be for looking at financial and tax incentives. It would not look specifically at the Van Loan bill but at the types of things that exist now, or it could be in other jurisdictions. The Americans have a similar program to what Bill C-323 proposes.

It would be for us to explore those measures, and then when we actually get the bill for review, we would have some context for how it could fit into an overall—

Environment and Sustainable Development

[Deb Schulte, Liberal, King—Vaughan, ON]

Mr. Speaker, I have the honour to present, in both official languages, the seventh report of the Standing Committee on Environment and Sustainable Development in relation to Bill C-323, an act to amend the Income Tax Act, regarding the rehabilitation of historic property. The committee has studied the bill and pursuant to Standing Order 97.1(1), requests a 30-day extension to consider it.

Income Tax Act

[The Speaker, Liberal, Geoff Regan]

Pursuant to an order made on Friday, March 10, 2017, the House will now proceed to the taking of the deferred recorded division on the motion at the second reading stage of Bill C-323 under private members' business.

The House resumed from March 9 consideration of the motion that Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property), be read the second time and referred to a committee.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Mr. Speaker, today Canadians proudly stand upon thousands of years of Canadian history and heritage. From the breathtaking totem poles that line the British Columbia coast, to the Algonquin wigwams that housed indigenous peoples on the unceded land upon which this Parliament currently sits, to Cape Spear Lighthouse on Newfoundland's eastern tip, to Fort Rodd Hill on B.C.'s Vancouver Island, to even the Justice Building down the road, the history reflected in our country's built heritage is simply astounding.

In this our nation's capital, we are surrounded by structures whose foundational stones were similarly foundational to the country we now call Canada. They herald the amazing accomplishments we have had together and serve as a reminder of the chapters in our history that we have not yet atoned for.

Throughout my 32 years working with Parks Canada, I was incredibly lucky to come face to face with Canada's built heritage every day. Through my work with the Historic Sites and Monuments Board of Canada and Parks Canada's national historic sites branch, I saw the impact our heritage has on communities and heard the stories people told about their historic sites.

In Saskatchewan, Batoche National Historic Site reminds residents of the independent spirit of the northwest resistance. In Yukon, Dawson City returns us to the excitement of the Klondike gold rush, while in British Columbia, Colwood's Fisgard Lighthouse lets people on the open waters know they have reached home, just as it has done since 1860.

Across the country, Canada's built heritage reminds us of where we came from and where we have been along the way. From the smallest rural towns to our grandest cities, the history contained within these buildings forms what it means to call our communities home.

When I think about built heritage in my riding of Cloverdale—Langley City, I think of George Lawrence House or Matheson House and what these places meant to the origins of both Surrey and Langley. While perhaps only the most ardent heritage buffs across Canada would be able to call upon their history, they have a profound value to the residents of my riding.

This is what makes heritage so valuable to maintain across the country. Everyone can think of a few national historic sites that inspire awe and instill wonder, but what makes them so valuable is their effect on the individual. Just as I take pride in the historic sites in my community, I am sure everyone in the House can identify a building, an area, or a district in their own riding without which their community would not be the same.

As the National Trust for Canada said, Canada's communities are made up of historic places that define our cultural identify, give shape and texture to our urban and rural communities, and attract tourist dollars. Yet every day, these places are being destroyed through desertion, decay, and demolition.

Today I would like to discuss Bill C-323 and measures that I firmly believe will benefit all Canadians. This discussion centres on three fundamental considerations concerning how this legislation would create tangible environmental, financial, and social benefits.

Canada's home-building industry is one our country's largest. It provides enormous economic benefits to our national economy and is the livelihood for many thousands of middle-class Canadians. This sector should be stimulated and encouraged, but we must do so in a way that is also environmentally responsible.

In most Canadian municipalities, home building is a major contributor to landfill waste. For example, Alberta's provincial department of the environment found that 25% of the province's landfill waste was generated by construction. By promoting the preservation of existing buildings, much of this discarded waste could be avoided, preserving natural resources and limiting the release of landfill greenhouse gas emissions.

In addition, the preservation and maintenance of existing housing stock has consistently been shown to decrease potential C0₂ emissions. According to the National Trust, if every heritage property in Canada were to be restored rather than demolished and replaced with a new structure, this would represent the avoidance of C0₂ emissions equivalent to the annual energy use of approximately 14.83 million homes. To put this in a more familiar context, in the city of Ottawa, which Statistics Canada listed as having 151,495 single detached homes in 2011, this energy savings would meet the energy needs of all of Ottawa's single family homes for approximately 98 years. This is not just a lot of heritage meaningfully conserved. It is an incredibly positive environmental initiative.

Despite this, there is a frequently cited argument that suggests that tearing down heritage properties is in fact environmentally prudent. The logic behind this claims that heritage properties are equipped with out of date furnishings and technology that would otherwise help reduce their environmental footprint. Despite the fact that newly constructed homes are often more environmentally efficient, the resources needed to demolish and construct a new home means that it takes several decades for the new structure to become a net environmental benefit over the existing heritage property.

As the Preservation Green Lab reported in its study, "The Greenest Building", it takes anywhere from 10 to 80 years for a new building that is 30% more efficient than an average-performing existing property to overcome, through efficient operations, the negative climate change impacts related to its construction.

The environmental benefits to heritage preservation are easy to see and an indication of the importance of the federal government's role in actively promoting it as an environmentally superior practice. Just as environmental protection benefits all Canadians, Bill C-323 would lead to equally comprehensive financial benefits.

To more closely examine the economic ramifications of Bill C-323, it is worth looking at the experience of our neighbours to the south. In 1981, the United States passed legislation creating a 25% federal tax credit for restoration of heritage sites. This built on legislation that was first introduced in 1976. In the three and a half decades since then, it is estimated that $23.1 billion in federal tax credits have generated in excess of $120.8 billion in private investment in historic buildings. This is roughly a 5:1 ratio of private to public investment, all of which ultimately ended back in the domestic U.S. economy.

Not only did the U.S. federal government's heritage restoration tax credit benefit the restoration industry, it boosted the entire national economy. This is due to the money multiplier effect, which explains how money being spent in one industry is eventually recycled into the broader civic, provincial, and national economy. If workers are paid to restore a heritage home, they may spend that money at Tim Hortons, whose employees will go on to, say, get a haircut, at which point the barber will buy sports equipment for his daughter. This cycle is essential to a government's economic considerations, and means that money invested in one area will necessarily benefit Canadians across the country.

In the United States, the confluence between public and private investments in heritage restoration has created great economic benefit. As the National Trust for Canada estimated, while the U.S. federal government spent $23.1 billion in restoration tax credits over the last 40 years, this credit resulted in an additional $28.1 billion in tax revenue, a net gain of $5 billion in tax revenue for that country. In short, the U.S. federal government made money by promoting heritage restoration.

In addition, heritage tourism represents a significant contributor to Canada's economy. Tourism is a multi-billion dollar a year industry, and it is estimated that cultural tourism accounts for one-third of that market. Reflecting the importance of this industry, the Canadian Tourism Commission reports that heritage tourism represents the past visitation of 34.5 million Americans and 2.6 million Canadian tourists.

As I have outlined above, I strongly believe that the preservation of Canada's heritage is a noble goal in and of itself. With that being said, however, the United States example shows how heritage preservation creates tangible benefits to society on the whole.

Based on the estimates of the National Trust, whose tireless efforts have left an indelible legacy on Canada's built heritage, since 1981, the United States heritage restoration tax credit has directly led to the preservation of over 41,000 historic properties that would have otherwise likely been left to neglect or demolition. This alone is a remarkable achievement, but it is the impacts on the broader society that make me believe Canada would be well served by a similar measure.

Along with tens of thousands of properties saved, the U.S. tax credit is estimated to have led to the creation of over 525,000 housing units, including 146,000 dedicated to low- and medium-income housing. In every corner of the country, we hear concerns about housing affordability. In my riding of Cloverdale—Langley City, I can safely say it is the topic about which I hear the most from my constituents.

Today, we are debating legislation that would help address Canada's growing housing issue, but this is not the only benefit that Bill C-323 would deliver to Canadians across the country. In tandem with an increase in housing units, the U.S. tax credit is credited with creating 2.4 million jobs. These are reliable, middle-class positions across a multitude of sectors, and would ultimately benefit the entire Canadian economy. This money would overwhelmingly go to small and medium enterprises based in Canada, and the increase in employment would give communities across Canada a welcome boost.

Not only is heritage good for communities as they currently exist, but it benefits community rehabilitation. One can think of communities across Canada, such as Toronto's Distillery District, Winnipeg's Exchange District, and Vancouver's Chinatown, where heritage and culture are inseparably entwined.

This bill would not guarantee the preservation of all heritage buildings in Canada, but it is a great first start. In Canada's 150th year, I can think of nothing more appropriate than signalling our support for both the history of this great country and the welfare of the people living in it today. In this spirit, I offer my support for Bill C-323 and encourage my colleagues in this House to do the same.

[John Nater, Conservative, Perth—Wellington, ON]

Mr. Speaker, it is indeed an honour to rise today to debate Bill C-323. Before I do so, I want to thank my colleague, the member for York—Simcoe, for bringing forward the bill. As our opposition critic for Canadian heritage, I consider him to be a national treasure for his hard work on this file.

In fact, this is not the only private member's business he has brought forward. He also has two other motions on the Order Paper, Motion No. 67 and Motion No. 62, which are equally important matters that I hope the House will take up at some point. There is the recognition of Sir John A. Macdonald's summer home in Rivière-du-Loup, and Motion No. 62, which recognizes the birth place of the Right Hon. John Diefenbaker in Neustadt, Ontario, which is just outside my riding. It is an important historical marker in southern Ontario, recognizing an exceptional prime minister.

To the bill at hand, it is an important bill for our communities and for the preservation of our historical heritage properties across our great country. I have to admit that I have a soft spot for heritage buildings. There are many beautiful older buildings in my riding of Perth—Wellington, which I am proud to highlight from time to time. In fact, my Wellington county constituency office is in one such heritage building. It is a beautiful old post office. It was the Harriston town post office for many years. Unfortunately, as often these older buildings do, it fell into a state of disrepair.

Shortly after I was elected, I was able to take a tour of the building and to see the state of repair it was in at the time. Thanks to a hard-working local family, it took ownership of the old post office and restored it to an exceptionally high level of standard. Now my constituency office in Wellington county is located in that building. It has been renamed the “Old Post” and is now home to a number of different local businesses and community groups. I am proud to have played a small role in the restoration of that building.

In Perth—Wellington, we also have other important sites, such as the Fryfogal Tavern and Arboretum. The Fryfogel Tavern is actually the last surviving site along the Huron Tract from the 1800s. It is an old building with a great degree of heritage and history associated with it. Its original proprietor, Sebastian Fryfogel, was a Swiss national who came to Canada at the time. He served as the first acting warden of Perth county. He served as a tax collector for the county and was the local militia leader. He had a strong history in the country.

Currently, the Stratford Perth Heritage Foundation is working to have that site designated as a national historic site. If it is successful, it would be the first national historical site in Canada to have a Swiss connection. Being of Swiss heritage myself, I find it is an important issue to highlight because it is an important site. I look forward to seeing Parks Canada review that documentation to hopefully make it a national historical site.

With 2017 upon us, and the 150th anniversary of Confederation, preserving and protecting our national heritage is important, now more than ever. Bill C-323 certainly would help us to do that.

As all members will know, rehabilitation and preservation of historic and heritage buildings is not necessarily easy. Nor is it inexpensive. When dealing with century-plus old buildings, the wiring is no longer up to code and accessibility standards have not been kept up to code. In many cases, neglected roofs need to be replaced, insulation needs to be redone, and windows need reinstallation in a way that preserves the historic and heritage nature of those buildings. Unfortunately, it is often not economically or financially viable to undertake these important renovations, so buildings are often demolished or, as the member for Kingston and Islands mentioned earlier, are left to be demolished by neglect. This is unfortunate because we lose a part of our history when we lose these important buildings.

Bill C-323 proposes to introduce a tax credit for expenses related to the rehabilitation of a historic property and will establish a tax deduction for the capital costs of property used in the course of historic properties rehabilitation. This will provide the owners of historical properties with a tax credit of up to 20% of the cost of rehabilitating the property, which will incentivize owners to restore their properties and assist them in their efforts to do so. In short, it makes it more affordable to preserve historical buildings, thus allowing more of our great historical architecture to remain standing rather than be demolished.

Bill C-323 would also create an accelerated capital cost allowance for eligible capitalized costs incurred during the same conditions of the tax credit. It would do so by allowing a minor reduction on the owner's income tax for the costs of rehabilitating the building. This would ensure that when owners of an historic property undertake restoration work at personal expense they are compensated. The restoration of a historic property, after all, is indeed a public good and it is only fair that, when individuals do the work at their own personal expense, we as a country are able to help in some way.

I understand there are some concerns that have been brought forward by different people about this bill, but I think that it strikes the right balance in preserving our heritage but also incentivizing individuals while respecting the public coffers as well. There are certain guidelines included in this bill. First, not any building qualifies. The building must first be on the National Register of Historic Places. Second, an architect must certify that the eligible building has undergone rehabilitation in accordance with the standards and guidelines for the conservation of historic places in Canada, and this will ensure that proper rehabilitation work has been done in accordance with the standards. It also incorporates a 10-year limit that the tax credit can be used. This strikes the right balance in terms of providing adequate support but not becoming too high a cost on the federal treasury.

I would also like to remind hon. members in this House that this bill is supported by a number of heritage and historical groups, including the National Trust for Canada, a not-for-profit organization dedicated to preserving our national heritage. In fact, the organization appeared with a brief before the Standing Committee on Finance, and the brief stated, “The federal tax system and federal spending are vital instruments shaping the ability of Canadians to protect and revitalize heritage places”. The brief went on to recommend that the government should introduce a federal rehabilitation tax incentive for heritage properties in Canada. Bill C-323 would do such a thing. It would help us preserve our national heritage buildings and our national collective heritage.

Again, I want to congratulate the member for York—Simcoe for bringing forward this important bill. It is an exceptionally pertinent and important way of preserving our heritage buildings, and we as parliamentarians should make every effort possible to encourage those who own heritage buildings to undertake the necessary work to keep them in good repair.

[Romeo Saganash, NDP, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I am delighted to speak to Bill C-323.

I was here when the sponsor introduced the bill. I really liked his speech during the first hour of debate because I have seen and visited most of the buildings he mentioned. Needless to say, his speech made me feel quite nostalgic. I thank the member for York—Simcoe for this bill, and I want to start off by pledging him my support.

Historic buildings in the riding of Abitibi—Baie-James—Nunavik—Eeyou are a valuable part of our heritage, our history, and our culture. I am in favour of maintaining our historic buildings, but the cost of repairing and maintaining are at times prohibitive, especially in my riding's northernmost communities.

For example, Village-Minier-de-Bourlamaque is a site of definite historical value. It is on the Canadian Register of Historic Places because of its connection to the 1930s gold rush in Abitibi.

Between 1927 and1950, many men looking for work came to Abitibi hoping to find a job. Village-Minier-de-Bourlamaque was built in 1935 by Lamaque Gold Mines Limited to house the miners. It has a very particular architectural style. The next time you are passing through Abitibi, Mr. Speaker, I invite you to stop and visit the mining village. The site has two kinds of residential structures, namely, the workers' houses and the posh homes of the former mine managers, who were called “boss” at the time, even in French.

Everything still exhibits the unique character of the1930s village. Most of the houses in the village are still inhabited today, and the owners are responsible for maintaining the historic character when they do renovations. Conservation and original appearance are important to safeguarding the heritage and drawing tourists to the village, not only for the city of Val-d'Or but the entire Abitibi-Témiscamingue region.

Very few people know that one of the first buildings in the Abitibi region was built in 1836, namely, the Sainte-Clotilde church in Kitcisakik. Still standing today, this church was built on the fur trade with Algonquin trappers from the area. It is now a designated religious heritage site in Quebec. It is one of the first buildings built in my riding. Dating back to 1836, it is nearly 200 years old.

In Whapmagoostui, which is at the limit of James Bay and Hudson's Bay, we find sites such as the Church of St. Edmund, constructed in 1879. Historic sites are important to maintain. It is critical that our history is understood and remembered, so that we can maintain an understanding of our past so that it is not forgotten.

Additionally, promotion of restoration efforts will create good, skilled jobs and promote economic development, while at the same time encourage tourism and promote respectful development while restoration efforts can help reduce environmental impacts of new building construction. This act would allow those struggling to afford the costs of rehabilitation projects to move forward.

However, it would also provide handouts to wealthy people who are not in need of assistance whatsoever. It does not seem reasonable to me that we should subsidize costs to rehabilitate these historic buildings while there is also a housing crisis in this country. I want clarity that the revenues lost from this bill will not impact Canada's ability to address the need for social housing in this country. As an indigenous person, I am very sensitive to that issue.

This bill gives me a chance to talk about the different priorities that a government needs to balance. A government has a responsibility toward the people who live within its borders. We all know that in Canada we have the Charter of Rights and Freedoms, which guarantees all people the same right. However, Canadian governments have shown that their priorities do not include ensuring the same standards of programs and services for indigenous people that they provide to other Canadians.

In general, I question the government's housing policy. However, today I question more specifically how a bill like Bill C-323 will respond to the current housing needs in indigenous communities. Unfortunately, due to Canada's colonial history, forced relocation, land appropriations, and poor government infrastructure in indigenous communities, we do not have many heritage properties. Therefore, if we are to implement a bill like this one, which will potentially reduce government revenues by millions of dollars annually, what will this mean for the indigenous people and indigenous communities in desperate need of housing? Will the government increase revenues elsewhere to ensure that the human rights of indigenous people are upheld?

Through the rules of the Indian Act, colonial governments have created the housing crisis that indigenous communities are experiencing. Under the act, restrictions on land ownership often prevent the development of housing programs. It is estimated that by 2031, the housing shortage on reserves will rise to 115,000 units. In order to bring the number of people living in each home on reserve down to the Canadian average of 2.5 persons per home, an additional 80,000 first nations homes are needed right now, yet the 2016 federal budget provided funding for first nations housing of just $206.6 million, which is enough to pay for 300 new homes, the servicing of 340 new housing lots, and the renovation of about 1,400 homes. To use the housing problem in my riding of Nunavik as another example, the aboriginal peoples Senate committee hearing on housing was told that Nunavik needs over 1,100 houses immediately. The $50 million included in budget 2016 is less than a quarter of the funds needed to address that shortage.

I have been asked many times by many colleagues on both sides of the House what the most important issue is facing indigenous people today, and what the government should do now to make reparations of historic injustices. Indigenous issues in this country have been neglected for so long that every single issue has become a priority.

I have one minute left. I just want to say that the NDP will support Bill C-323 because we believe in restoring historic buildings that are part of our heritage. Obviously, we also believe that it is important to understand how expensive these renovations are.

We will seek to amend the bill during review in committee in order for the tax credit to also be offered to people with a low or medium income. A billionaire can afford to renovate an old building, but it is harder for the average Canadian or low-income earners.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, it is a pleasure to rise today in this House on behalf of my constituents of Kingston and the Islands to speak in support of Bill C-323, an act to amend the Income Tax Act. I will begin by thanking my colleague for York—Simcoe for putting forward this substantive and very timely legislation.

My speech today will focus on three themes. First, I will address the importance of preserving heritage buildings. Second, I will draw from my experiences as a municipal politician to explain why I believe there is a desperate need for financial incentives to encourage heritage restoration. Third, I will speak to the economic benefits associated with the restoration of historically designated buildings.

In his opening remarks during the first hour of debate, the sponsor of the bill talked about the sense of awe he feels when walking through historic sites. While we may come from different parts of the province and indeed different sides of this House, I can say that I share his sense of awe when I visit one of the many historic properties in my riding of Kingston and the Islands.

These buildings tell a story about who we are and where we came from. They impart important lessons from the past and remind us about the challenges we have overcome and the accomplishments we have had in this country. In short, they highlight and bring to life those special moments in our history that are worth remembering.

I have often said in this House that I am proud to represent Canada's first capital, which has firmly etched its place in our country's history. Kingston's rich history and culture endures and is kept alive by our treasured heritage properties. To give members some perspective, about 120 buildings in Kingston belong on the national register of historic places, and more than 1,000 are listed on the city's municipal register and designated under the Ontario Heritage Act. These include nationally important historic sites, such as the Kingston Penitentiary, the original CN station, and the Nine Mile Point lighthouse on Simcoe Island.

This brings me to the second focal point of my speech, which is the need for real incentives to restore and maintain heritage properties.

Growing up in Kingston, I was fortunate to learn from a young age to appreciate the historic value of built heritage. It was later on as mayor that I gained a deeper understanding of the challenges associated with owning or acquiring a heritage building. The reality is that many of our most prominent historical buildings are facing an uncertain future, and I would like to talk about a few examples to illustrate what I mean.

The outer station in Kingston is a designated historical site that was built by the Grand Trunk Railway in 1856, 11 years before Confederation, to serve as a halfway point between Montreal and Toronto. It holds a special role in our history and was used by Canada's first prime minister, Sir John A. Macdonald, in his travels between Kingston and this place during the early formative years of our country. Among other notable individuals, King George VI famously arrived there on a visit to Kingston in 1939. The station was closed in 1974, and despite its historical importance, it now sits derelict and in ruins. This is what is known as demolition by neglect, a reality that, unfortunately, is far too common. After years of deterioration, the city has estimated that it would cost nearly $4 million for CN, the current owners, to repair this building and clean up the contamination of the land.

Another perfect example of a challenging situation in my riding is that of the Nine Mile Point lighthouse, which was erected on the western tip of Simcoe Island in 1833 to guide vessels navigating the northeastern waters of Lake Ontario. As the oldest lighthouse on the Canadian side of the Great Lakes, and possibly in the entire Great Lakes, it is now retired from its operational duties and has appropriately been nominated for designation under the Heritage Lighthouse Protection Act. The problem is that any potential new owner of this historic lighthouse might be responsible for the significant cost of maintaining this property and remediating it appropriately, as required by federal and provincial laws.

Restoration in both cases has definite community support, but the projects present a significant undertaking, and I am concerned that right now we do not have adequate incentives to encourage anyone to take them on.

Bill C-323 proposes a modest 20% tax credit for rehabilitation work done on designated historic buildings and a three-year accelerated write-off period for spending on these buildings. This would give interested parties the incentive to take on these projects.

These measures would increase the confidence of current and future owners of historic properties, encouraging them to rehabilitate and reuse historically significant buildings and avoid the grim alternatives of demolition or demolition by neglect.

This incentive is also a win-win in situations where the federal government is trying to divest of a building that no longer has an operational use. Nine Mile Point Lighthouse, Kingston Penitentiary, and Outer Station are all examples of federally owned properties, or those owned by a crown corporation, that are considered surplus and are no longer operational. While the federal government will not outright demolish these historic properties, it is also not required to do anything to preserve them.

The options are to let them remain as a liability on the federal government's balance sheet, in which case they will slowly deteriorate over time because the federal government is not required to repair them, as a third party would, or find a way to transfer them to an interested party who will actually invest in rehabilitation.

The tax credit proposed in Bill C-323 would make the second option more feasible. It would make it less likely that federal properties will be demolished by neglect, which is exactly what has happened in the case of the Outer Station in my riding.

When we talk about heritage properties, we often think about a few particularly special landmarks. I have just named a few that stand out in my community, and I am sure every member could do the same for their own ridings. However, we have to remember that built heritage also includes homes owned by private landowners, who face high costs to maintain their properties over time. As the member for Kootenay—Columbia noted in his speech during the last hour of debate, owners of historic buildings typically incur an additional 21% in costs, so it seems fair and appropriate to offset those costs with a 20% tax credit .

I will now move to my third and final theme, which is the economic benefit of the tax credit. To estimate the financial impact of this bill, we can look to the United States, which has had a historic tax credit program since 1981. The program has been a resounding success at stimulating economic growth and creating jobs.

So far, over $23 billion in federal credits have generated more than $28 billion in additional tax revenue and leveraged over $120 billion in private investment; 2.4 million jobs have been created, and tens of thousands of historic properties have benefited.

In Canada, a pilot program was launched in 2003 that yielded equally promising results. Over the five-year pilot project, $21.5 million in federal contributions supported 49 projects and leveraged $177 million or more than eight times more in private sector investment.

We should make policies based on the best evidence, and in this case, the evidence is very clear. lncentivizing heritage rehabilitation not only serves an important public goal but also stimulates exactly the kind of economic activity we need right now. It will generate considerable private investment and will create well-paying jobs in construction, skilled trades, and many other fields.

In light of Canada's 150th birthday, I cannot imagine a more appropriate time to be having this discussion. The experience of visiting a historic site can teach us much more about our past than reading a textbook, and we should not deprive future generations of this opportunity. If we do nothing, we risk losing these national treasures to demolition or demolition by neglect, which unfortunately is happening right now in my community.

We need to positively reward the goodwill of Canadians who are acting in the public interest by preserving our built heritage. To ensure our heritage buildings can be enjoyed by current and future generations, we need to get serious about rehabilitation, and we must act now before it becomes too costly or impossible to do so. My colleague has put forward this bill to do exactly that, which I am proud to support.

To conclude, I hope all members will think hard about the significant cultural and economic benefits that this bill could have to their communities and throughout the country.

[Peter Kent, Conservative, Thornhill, ON]

Mr. Speaker, having seconded Bill C-323 introduced by the member for York—Simcoe, I am delighted to speak to the very meaningful benefits this legislation would bring not only to the owners who preserve and restore heritage properties of all sorts, but to the communities where they are located, as well as to our national cultural heritage.

I represent a riding which has a magnificent respect for the original townsite of old Thornhill, applying its own regulations and encouragement of preservation and restoration under the Ontario Heritage Act. The City of Markham's heritage department offers short-term loans to owners wishing to embark on a restoration adventure, and upon an owner's commitment to conserve the heritage features of a designated property, the City of Markham will actually reduce annual property and education taxes by fully 30%. As well, since 2000, Markham has presented annual heritage awards to owners who have completed restoration projects in compliance with heritage standards.

I am pleased to share with members the pride that Cilla and I share, having survived the roller-coaster perturbation involved in the restoration of 111 John Street, in Thornhill.

The central part of the designated house, built in 1842 by a miller named John Lane, first served to house the coopers who constructed the wooden barrels to carry cornmeal and flour back to England. It was effectively a bunkhouse. The house did have a late Victorian expansion, but its 19th century charm survived even the dilapidated, fixer-upper state in which we found it and acquired it in 2007.

To make a long story short, our marriage survived the top-to-bottom three-year restoration of the house, and we were honoured to receive a Heritage Markham Award of Excellence for our restoration project. Just to clear the air and to assure this House that I support Bill C-323 for its high-minded goals of celebrating restoration and maintenance of Canada's heritage buildings far beyond old Thornhill, indeed right across Canada, and not for personal gain from the very reasonable benefits that this law would provide, let me inform members that because a heritage property demands constant loving care and repair that many homeowners today might find challenging, Cilla and I, unfortunately, no longer own this home.

When I had a close call with mortality a couple of years ago, I received stern spousal direction that I was no longer to venture up onto the roof to carry out maintenance and fixes or to wield my trusty chainsaw as an occasionally necessary high-level amateur arborist. So, reluctantly, we sold to, we hope, we believe, a family as enchanted with this heritage property as we were.

Let me thank members for indulging this explanation of my fixation with historic properties, modest and grand, and let me return to the very important specifics of Bill C-323.

My colleague, the member for York—Simcoe, in his introduction of this private member's legislation, reminded the House of the very real public interest in the preservation and restoration of heritage properties. He spoke directly to the cost burden that rehabilitation is usually more expensive than alternatives such as demolition and a replacement new build, but certainly it is far less expensive than the priceless loss of physical Canadian heritage in a tear-down.

He pointed out that the bill would help owners who are preserving historic places with a modest portion of the cost of delivering this important public benefit. This bill would create a 20% tax credit for rehabilitation of recognized, designated historic places. The bill would also create an accelerated capital cost allowance for eligible capitalized costs incurred under the same conditions as the tax credit.

What exactly are eligible costs? Under the provisions of Bill C-323, these are costs that would include construction, insurance, development, site improvement, as well as basic professional fees. These eligible costs would exclude acquisition, cosmetic and furnishing costs of such a structure.

Our sponsor, the member for York—Simcoe, reminded us that not so many years ago, the government implemented a pilot program with a tax credit and end goal such as the one this bill would create. He cited the fact that the response doubled, on average, the property values of the respective structures and that the tax credit actually incentivized significant GST and corporate tax revenues.

Many countries in different parts of the world have heritage grants and associated programs. The most similar policy, I believe, is the tax credit program in the United States, which provides a 20% tax credit on costs related to the rehabilitation of designated historic buildings, as well as a 10% credit on non-designated buildings built before 1936. The program in the United States was implemented in 1976. It is widely recognized as having been exceptionally successful with over 41,000 projects certified. As well, the program has been found to have a net positive impact on the United States Treasury of $5 billion over the life of the program to date.

Under Bill C-323, eligibility for the tax credit and accelerated write-off of any restoration project would have to be first certified by an architect, following Parks Canada's easily available published standards for conservation of historic places.

The integrity of this evaluation process is ensured through the use of criteria that are not only recognized across Canada, but internationally. There are many programs in different parts of the world which have adopted the Parks Canada criteria for their work in designating and recognizing historic buildings.

Although this process is very exacting, it need not be burdensome or costly and can, we believe, be very easily applied to the detail and the coverage provisions of Bill C-323. The Parks Canada historic sites record with regard to major structures and locations, I am sure hon. members recognize this, is world-class. Application of the Parks Canada historic sites standards to fulfill the provisions of Bill C-323 would be scalable, and again, as I said, not burdensome or costly.

In closing, I would echo the words of my colleague from York—Simcoe in saying that Canadians will be much more likely to embrace the idea of having their heritage properties designated as historic if the bill is passed by the House. While the design of the legislative package is very modest in dollar terms, it would represent a very meaningful investment in our national cultural infrastructure.

I encourage all members of the House, all parties in the House, to stand in support of Bill C-323.

The House resumed from February 10 consideration of the motion that Bill C-323 be read the second time and referred to a committee.

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Mr. Speaker, I am honoured to stand in the House on behalf of my constituents of Nanaimo—Ladysmith to speak to the benefits of heritage conservation, energy conservation, and job creation.

New Democrats have long supported Canadian heritage and we support the goal of this private member's bill of preserving historic stock. New Democrats support maintaining historic buildings as part of our cultural heritage and due to the cost of repairing these historic buildings, we support government involvement to help defray the costs.

This legislation would help to clear the path for the creation of good green jobs; jobs that are stable, safe, and family-supporting; jobs that do not endanger the climate or the environment; and jobs that help us in the gradual transition away from reliance on fossil fuels.

I thank the City of Nanaimo, which I am honoured to represent, for its very detailed letter supporting the benefits of Bill C-323, an act to amend the Income Tax Act for the rehabilitation of historic property.

Chris Sholberg, who is a planner with community and cultural planning in the City of Nanaimo, wrote to me to say that the bill is “inspired by the successful US Federal Historic Tax Credit Program, the outcome of which has leveraged over $78 billion in private investment since 1976, resulting in the preservation of over 41,000 historic properties, and in the creation of hundreds of thousands of housing units, many for low/moderate income families.”

He wrote, “In Canada, Bill C-323 has the potential of achieving the same success, widely affecting property owners and developers, the construction industry, and positively impacting the economy, job creation and environmental issues.”

The letter went on to say that the tax measures contained in this bill “would transform the economic fundamentals for renewing historic places, and will encourage building conservation of every size and type, from landmark commercial buildings to modest homes.”

The City of Nanaimo provided examples of buildings within the city that would benefit from such an incentive, including the Great National Land Building, 17 Church Street; the Occidental Hotel, 432 Fitzwilliam Street, also known as the Oxy; Nanaimo Firehall Number 2 on Nicol Street; the Nanaimo Hospital, now Malaspina Lodge, on Machleary Street; and Fernville, also known as The Land Residence, on Irwin Street.

I thank the city for its strong advocacy and its encouragement for this federal partnership that could help jobs and the preservation of historic buildings at the local level.

I also received a letter encouraging support for the bill from Chelsea Challis in Nanaimo. She wrote, “As a member of the development and construction industry in Nanaimo, I regularly witness historic properties being demolished because the cost to restore and maintain them is more expensive than tearing them down and replacing them with new buildings”.

The letter went on:

The unfortunate consequence of this method is that the city immediately loses a piece of its history that can never be replaced. Furthermore, with current building codes, regulations, and the high cost of construction materials, new structures cannot be built with the same charm and craftsmanship as many historic buildings were originally constructed with. The current system does not encourage architectural preservation but, rather, encourages demolition and replacement. Bill C-323 will give owners and developers an incentive to save and restore their historic properties, which will not only benefit them, but will also benefit the entire community.

Ms. Challis wrote, “Studies show building rehabilitation generates upward of 21% more jobs, including skilled jobs, than the same investment in new construction.

She adds to the list that the City of Nanaimo provided The Jean Burns Building recently destroyed mostly by fire in downtown Nanaimo and also The First Nanaimo Scout Hut.

I am grateful to members of my community who have provided letters of support.

I will note that I also have a letter that I just received this morning from Laurie Gourlay, writing on behalf of Salish Sea Trust who encourages us to “specifically address rehabilitation of historic buildings, with all of the cultural, economic and social benefits that that provides,” and inviting our attention to “the parallel benefits afforded when similar considerations and support are provided to cultural and natural rehabilitation measures.”

We thank the member for bringing the bill forward. We look forward to speaking further, when we have the second hour of debate on the bill, about some of the specific benefits with respect to jobs, the environment, and conservation in our own communities. Also, New Democrats will raise some concerns at committee about ensuring that this benefit is particularly targeted toward lower- and middle-income earners, who are particularly economically crunched when it comes to finding the budget for doing the kinds of conservation and heritage renovations the bill supports.

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Mr. Speaker, I rise today in this chamber to outline how the Government of Canada is committed to a fair and efficient tax system that benefits middle-class Canadians.

The bill before us today, as sponsored by the member for York—Simcoe, seeks to establish a tax credit for expenses related to the rehabilitation of a historic property. However, tax changes should ideally be undertaken through the budget process. This is to allow the government to fully consider the trade-offs, balance the priorities, and undertake new fiscal commitments only to the extent they are affordable.

This is why the first point I want to underline is that the government is committed to ensure that federal tax expenditures are fair for Canadians, efficient, as well as fiscally responsible. This is the reason that in the government's first budget, growing the middle class, we announced that we would be undertaking a comprehensive review of tax expenditures. This exercise is part of a broader government commitment to eliminate poorly targeted and inefficient programs, wasteful spending, and ineffective or obsolete programs. At the end of this process, Canada will be one step closer to fairness and efficiency for its citizens and taxpayers.

The bill before us today contains several examples of the issues that would need to be considered when assessing the fairness and efficiency of a tax measure, and I will discuss a few of them.

For example, a key consideration is whether the measure would actually encourage the preservation of historic properties or simply represent a windfall to property owners for doing what they were already required to do.

Another question is whether such a tax credit would create any new inequities between historic property owners and other homeowners.

A third obvious question is how much of a revenue cost such a bill would entail for the government. This question is certainly relevant. As currently drafted, Bill C-323 contains no upper limit on the amount that can be claimed for tax purposes. The government would also have to assess whether requirements of the bill would be practical for the Canada Revenue Agency and Parks Canada to administer.

These are only a few examples of the considerations that would have to be weighed carefully in assessing Bill C-323.

From day one, our government has been focused on advancing the economy for middle-class Canadians. Last year, we replaced the previous system of child benefits with the Canada child benefit, a simpler, tax-free, more generous, targeted benefit that would help those who needed it most.

The CCB, built on our middle-class tax cut, has reduced taxes for nearly nine million Canadians. These two measures together mean that more middle-class Canadians have more money in their pockets, and they can use it as they see fit.

A strengthened middle class means that hard-working Canadians can look forward to a good standard of living and better prospects for their children. When the middle class thrives, we all thrive. We have committed historic levels of investments in infrastructure, which will expand opportunities and deliver stronger, more inclusive growth.

Canadians value fairness. That is why, in budget 2016, we also took action to improve the integrity of Canada's tax system to protect the country's revenue base and to give Canadians greater confidence that the system would be fair to everyone.

Here is what we are doing. In April 2016, the revenue minister announced a series of actions that the Canada Revenue Agency will take to crack down on tax evasion and combat tax avoidance, thanks to the $444.4 million commitment in budget 2016. These funds are enabling the CRA to hire additional auditors, develop robust business intelligence infrastructure, increase verification activities, and improve the quality of its investigative work. These additional employees will increase the number of CRA audits focused on high-risk taxpayers by 400%.

Furthermore, the government is streamlining its efforts by embedding legal counsel within investigation teams, so that cases can be quickly brought to court. Two new mechanisms are being formed: a special program dedicated to stopping the organizations that create and promote tax schemes for the wealthy, and an independent advisory committee on offshore tax evasion and aggressive tax avoidance that will provide strategic advice to the CRA on approaches for combatting offshore tax evasion and tax avoidance.

Canada has also been a very active participant in international efforts to address tax evasion. We are an active member of the global forum on transparency and exchange of information for tax purposes, which was established to ensure that high standards of transparency and exchange of information for tax purposes are in place around the world. Canada has also developed an extensive network of bilateral tax treaties and tax information exchange agreements, which provide for exchange of information.

As confirmed in budget 2016, legislation was recently adopted to implement the common reporting standard for the exchange between tax administrations of information on financial accounts held by non-residents. Canada joins more than 100 other jurisdictions that have similarly committed to implement the new standard.

Canada has also been actively engaged in a second multilateral initiative aimed at addressing base erosion and profit shifting, or BEPS. This refers to certain tax planning arrangements undertaken by multinationals, which, though often legal, exploit the interaction between domestic and international tax rules to minimize taxes. Canada has already implemented a number of the BEPS project recommendations. Going forward, the government will continue to work with the international community to ensure a coherent and consistent response to BEPS.

Canada supports the important goal of improving corporate transparency globally. The government has agreed to strong rules in both the Financial Action Task Force and the global forum on transparency and exchange of information for tax purposes in support of corporate transparency. Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations enhance Canada's requirements for financial institutions regarding the collection of information on beneficial owners of corporations.

In closing, I would like to assure hon. members of our government's commitment to helping the middle class and those who are working hard to join it.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Mr. Speaker, I am pleased to rise and speak to Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property).

This private member's bill from my colleague, the member for York—Simcoe, is a very timely piece of legislation that I believe will benefit Canadians from every community across this country, particularly as Canada gears up to celebrate its 150th birthday in July.

Over the past 150 years, Canada has grown immensely, both culturally and in terms of population. Just this week, Statistics Canada released data from the latest census that showed Canada continues to be the fastest-growing country in the G7.

The census data released also demonstrated that Canadians are increasingly choosing to leave rural areas and migrate towards large urban centres. With this urban centre growth in population, one of two things tends to happen: either there is urban sprawl or older homes are torn down in order to build new subdivisions that can house more people.

One hundred and fifty years ago my home province of British Columbia had a population of just 36,000 people. Today, it has a population of over 4.5 million. As we continue to build new buildings and continue to pursue innovative architecture to accommodate this vast increase in population, we must make sure that we are preserving our history. Heritage homes tend to be found in central locations, as people settle and develop around communities that have existed in the past.

These properties also tend to be the first targets for demolition as developers and landlords tend to find it cheaper to demolish and rebuild. It is not expedient for them to restore and maintain heritage properties. However, as we approach Canada's 150th birthday, it is a perfect opportunity to remind Canadians to be be proud of our history and our heritage. It is an important opportunity to encourage them to preserve the work of Canadians who came before us, rather than tear down and build anew.

This is exactly what the bill from the member for York—Simcoe aims to do. Bill C-323 would create a new tax credit for the rehabilitation of buildings that are on the Canadian Register of Historic Places.

With this legislation, Canadians restoring heritage properties would be able to claim a 20% tax credit on rehabilitation costs, as well as receive an accelerated capital cost allowance. Furthermore, this legislation would give the Minister of Canadian Heritage the power to apply this credit to provincially and territorially designated historic properties that are not included on the Canadian Register of Historic Places.

We know that these kinds of initiatives work. The Canada 150 infrastructure fund was set up under the Conservative government and intended to assist communities in building new infrastructure to help their constituents celebrate this very special milestone of our country.

This legislation would help us preserve the history of our communities. In the mid-2000s Canada ran a pilot project for this kind of policy, the commercial heritage properties investment fund. This pilot program generated eight private sector dollars for every one public sector dollar invested in the restoration of heritage homes. This is much higher than the five private sector dollars earned in an equivalent program conducted by our neighbours down south in the U.S.

Furthermore, this program, on average, doubled the market property values of historic properties, business revenue, and occupancy rates of the historic properties.

Canada clearly has the appetite and potential to restore and uphold our heritage properties. With Canada 150 on the horizon, this is the perfect opportunity to assist Canadians in preserving our history.

We also want to encourage the creation of new jobs: construction jobs, restoration jobs, and new trades jobs. By including the acceleration of the capital cost allowance alongside the tax credit, the legislation would reduce the long-standing conflict between what constitutes a deductible repair versus a capitalized cost, a problem that often slows down or completely hinders rehabilitation projects.

Finally, this policy just makes good sense. Canadians already enjoy a home renovation tax credit, so why not have this same tax credit for heritage home restorations? By minimizing costs to Canadians engaged in restoring heritage homes, we are also incentivizing Canadians to restore and maintain these important pieces of Canadian history.

This legislation also has broad support from stakeholders right across the country. National Trust, one of Canada's leading heritage protection advocacy groups, said, “This is an idea that has widespread support from heritage advocates, federal, provincial, territorial and municipal governments, and the Federation of Canadian Municipalities”.

Architects have called the bill a win-win for heritage advocates and for local economies looking to create jobs.

We know the long-lasting benefits and impacts that heritage properties can have in our communities. In my own riding, we have the Elgin Heritage Park, an entire area that is dedicated to the preservation of Canada's history. Stewart Farm, located in Elgin Heritage Park, is on Canada's register of historic places. Stewart Farm offers Canadians and schoolchildren an opportunity to have a first-hand view of the life of pioneers and the history of Surrey's agricultural sector. This property could benefit from this legislation and help children of future generations to continue to learn and benefit from its operations.

These are the kinds of initiatives that we should be undertaking as we approach Canada 150. I hope that my colleagues on all sides of the House will join me in support of Bill C-323.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Mr. Speaker, I am very pleased to rise today to speak directly to Bill C-323, an act to amend the Income Tax Act (rehabilitation of historic property). Again, I would like to thank my colleague from York—Simcoe for putting forward this important legislation. Indeed, it is the first time legislation like this has come before the House, although there are similar laws in place in the United States.

We are going to support this at second reading. We would like to get this to committee to have some discussion. The reason we are going to support it is that we really do believe in maintaining our historic buildings as part of our cultural heritage. When I was mayor of Cranbrook, we were looking for ways to try to increase the support for keeping historic buildings, and this is certainly one way to do that. There is an additional cost of course, if someone owns a historic building. It is up to about an additional 21% in cost, so offsetting it with a 20% tax rebate for the improvements seems absolutely appropriate.

I want to talk about some of the support that has come forward to me on the bill.

The Royal Architectural Institute of Canada has said it believes:

...there is an important federal role for leadership in heritage conservation. Policies that promote preservation and re-use of historic properties have demonstrated huge economic returns on investment through job retention and creation, tourism, and enhanced property values.

Policies such as tax incentives not only help protect cultural resources and the history represented by heritage places, they promote respectful redevelopment in our communities. In addition, conservation, repair, and adaptation fight climate change by producing less carbon than new construction.

I also received a letter from the National Trust of Canada, which says, “The significant impact of the measures proposed in Bill C-323 would be felt” in ridings across Canada It goes on to say:

They would transform the economic fundamentals for saving historic places...encouraging the rehabilitation of heritage buildings of every size and type. In the process, they would create more skilled jobs than new construction, and promote the retention of existing buildings, which serve as important carbon sinks.

It further says:

There are many examples of the significant financial and environmental impact of heritage conservation.

Job Creation--Studies show building rehabilitation generates upwards of 21% more jobs, including skilled jobs, than same investment in new construction;

Economic Stimulus--The Commercial Heritage Properties Incentive Fund (CHPIF), a Canada-wide pilot program (2003-2008), was designed to test the benefit of a heritage tax credit. The results were impressive: Federal contributions of $21.5 million supporting 49 projects leveraged over 8 times more in private sector investment ($177.2 million); and

Sustainability and Climate Change--Building renewal and re-use capitalizes on materials and energy already invested, reduces construction and demolition waste, and avoids environmental impacts associated with new development. A recent study shows that it takes from 10 to 80 years for a new “green” building to make up for the negative climate change impacts of its construction. In other words, the greenest building is one that already exists.

From a community in my own riding, the city of Nelson says:

These tax measures could transform the economic fundamentals for renewing historic places, and encourage building conservation of every size and type, from landmark commercial buildings to modest homes.

Council has learned firsthand the significant financial impacts of heritage conservation in Nelson. Further studies have also shown that building rehabilitation generates over 21% more jobs...than the same investment in new construction...capitalizes on materials and energy already invested; reduces construction and demolition waste, and avoids environmental impact...

It went on to say that, “the significant impact of this Bill will be felt in Nelson”. Indeed it will be felt in all of the communities in Kootenay—Columbia and across Canada. It urges the the support for Bill C-323.

While we will be supporting the bill for all the right reasons, right through second reading, we do hope to have some further discussion at committee. We are a bit concerned that there is no means test for the tax rebate. The millionaire or billionaire owner of an historic building in, say, Toronto's Forest Hill would be able to claim a 20% tax credit, despite being well able to afford to pay for the work without a federal subsidy.

We will explore that a little further at committee. We definitely support the principle of this bill, and will be supporting it at second reading.

[Ginette Petitpas Taylor, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I want to thank my colleague for his presentation.

I am very pleased to rise to speak to Bill C-323. The bill before the House today, sponsored by the member for York—Simcoe, seeks to amend the Income Tax Act “to establish a tax credit for expenses related to the rehabilitation of a historic property”.

Tax changes should ideally be made as part of the budgetary process. This gives the government a chance to fully examine all options, strike a balance between priorities, and make new fiscal commitments only when they are affordable and the government can do so responsibly.

Bill C-323 raises a number of issues that must be fully and thoughtfully considered. Of course, cost is one important element, but it is not the only one.

According to Parks Canada, there are approximately 13,000 historic sites in the Canadian Register of Historic Places. However, the number of distinct heritage properties is probably much higher. Indeed, the register includes heritage districts that could include more than one property. For instance, in Ontario alone, there are 121 heritage districts that comprise over 23,000 properties.

I would also like to point out another challenge when it comes to determining cost. The bill does not cap the amount people can apply for for tax purposes. It is completely irresponsible.

We also have to consider whether this kind of tax credit would actually promote the preservation of historic property rather than just provide an unexpected perk to the owners for doing work that they are already obliged to do.

Equality among homeowners is another very important issue we need to discuss. Some people will be eligible for the home renovation credit while their neighbours, who do not own a designated historic property, would not be eligible even though costs are incurred in both cases. That would be totally unfair.

This bill is also likely to result in a sharp increase in applications for historic designation. The government will have to assess Parks Canada's ability to meet that increased demand. That will result in more costs.

Moreover, as with any new tax credit, the government will have to evaluate the administrative burden on the Canada Revenue Agency.

The Government of Canada is committed to promoting equality and efficiency for the middle class and all Canadians, especially when it comes to our tax system. That is why, in budget 2016, the government announced that it would do a comprehensive review of tax expenditures. This effort is part of the government's overall commitment to eliminate poorly targeted and ineffective programs, wasteful spending, and ineffective and obsolete government initiatives. We are striving for equality and efficiency for the middle class.

The government recognizes the importance of preserving Canada's heritage in the interest of the middle class and all Canadians. As a matter of fact, the Income Tax Act already contains incentives to encourage individuals and corporations to make donations for the preservation of historic assets. Donations of such assets or donations intended to support the cost of preserving and maintaining such assets to registered charities are eligible for a charitable donation tax credit for individuals or a tax deduction for corporations. Registered charities are fully exempt from paying tax on the income they receive.

When we add provincial tax relief to the equation, the charitable donation tax credit comes to, on average, 46¢ for every dollar over $200. For most taxpayers who donate more than $200, this tax credit eliminates any tax to be paid on most of the donations and reduces other taxes owing.

A tax credit is also available for up to 75% of an individual's net income and can be carried forward for five years.

Canadian tax incentives for charitable donations are among the most generous in the world. The federal government provides approximately $3 billion in tax assistance annually to the charitable sector.

The government acted responsibly by implementing a measure to strengthen the middle class. One of the first measures we implemented after becoming a government was to introduce a tax cut for the middle class, and that has been in effect since early last year. In total, nearly nine million Canadians are now benefiting from this tax cut.

The second measure that our government took to help the middle class and those working hard to join it was to introduce the new Canada child benefit in budget 2016. This measure gives more money to Canadian families in order to help them deal with the high cost of raising children.

Nine out of ten families are now receiving more money thanks to this program. The new Canada child benefit is simpler and more generous than the old child benefit system it replaced, and it is completely tax-free. It also does a better job of targeting the people who need it the most.

Thanks to the new Canada child benefit, about 300,000 fewer children will live in poverty in 2017 compared to 2014, which means that Canada's child poverty rate will drop by about 40%. This new benefit is the most important innovation in social policy in a generation.

A stronger Canada pension plan was a key promise we made to strengthen the middle class. We delivered on that commitment by working in close collaboration and common purpose with our provincial and territorial partners.

A secure and dignified retirement is certainly a top priority for hard-working Canadians. It has been a pillar of Canadian prosperity since the 20th century.

We know that middle-class Canadians are working harder than ever, and many of them are worried about not having saved enough by the time they retire. We also know that young Canadians in particular, few of whom can expect to have jobs that offer a workplace pension plan, find it challenging to save enough money for retirement.

We enhanced the CPP to improve long-term economic outcomes for Canadian families. Although it will take a little time to adjust, these foundational changes to our pension plan will provide better support to Canadians in the long term.

An enhanced CPP is the right tool at the right time to improve the retirement income security of younger workers. It is an opportunity for today's hard-working Canadians to give their children, their grandchildren, and future generations a more secure retirement.

In its previous budget, the government made major investments in education, infrastructure, training, and other programs that will help to secure a better quality of life for the country's indigenous peoples and build a stronger, more united, and more prosperous Canada.

Our government invested in modernizing and upgrading public transit, improving waste water systems, increasing access to affordable housing and protecting infrastructure from the effects of climate change. We increased funding for innovation, co-operation and partnerships to protect the integrity of our health care system. We put people first and we are giving Canadians the help they need right now, not 10 years down the road.

At the same time, our government is investing for the years and the decades to come, so that our children and grandchildren can inherit a Canada that is more prosperous and full of hope.

[Peter Van Loan, Conservative, York—Simcoe, ON]

moved that Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property), be read the second time and referred to a committee.

Mr. Speaker, as one walks the streets of London, the quartiers of Paris, the piazzas of Rome, one stands in awe. The buildings speak to us, of great artists and philosophers who lived within, of revolutions staged there that changed the world, of the growth and advance of societies and cultures that those buildings mark.

We look at that built heritage in those great cities, not just for its own intrinsic beauty but because those buildings tell stories, of people, of history, of that place, and of who we are. We may be living in the here and now, but the built heritage informs us of the many twists and turns of humanity that brought us here.

Built heritage matters. It is important. It tells us who we are and why. It is no surprise then that the great places of the world are defined by their built heritage, and that is what people come to see. It informs and it inspires.

It is the same in Canada. We are debating this bill seeking to protect Canada's built heritage while we are inside Canada's most iconic building. We more than most can appreciate the meaning that the very special sense of this place gives to the tremendous honour we have in serving in the House of Commons.

Our built heritage here, all around us, reminds us of our past, our founding Fathers of Confederation, the Inuit and aboriginal peoples who first made this home, the trappers, the railway, the industries, the farmers and labourers who built the economy. All of those are literally carved into this building. The stone and the wood too speak to our lands and our forests. We have all around us a tangible example of why preserving our built heritage matters.

Bill C-323 seeks to preserve and protect our country's important historic built form by encouraging its restoration. The bill would do this through two simple devices. The first element is a 20% tax credit for spending on the restoration of historic buildings. The second element is an accelerated three year capital cost writeoff for the rest of the restoration cost.

The policy rationale behind the bill is simple. There is strong public interest in encouraging the preservation and restoration of significant historic buildings. However, the cost to individual owners is much higher than the alternative of demolition and new construction. When we ask private owners to preserve historic buildings through a heritage designation, we are asking them to deliver an important public benefit, but we are asking those private citizens to bear the full high cost of delivering this, something from which we all benefit. Through the tax credit and the accelerated writeoff, we are proposing to provide a modest measure to offset some of the privately borne costs of restoring important buildings in our communities.

Too often the economic burden creates an incentive to demolish. We just witnessed that with last month's demolition of the 110-year-old Beaux Arts Bank of Montreal building at Yonge and Roselawn in Toronto. Although plans had been designed to incorporate restoration of the heritage building into a new development, at the end of the day, the owners chose to demolish instead, resulting in much unhappiness in the surrounding community.

This bill would help to change those calculations and give property owners a reason to do what is right not just for their interests, but in the community's interest.

This is not a partisan initiative. It crosses party lines. I want to thank the Liberal members for Cloverdale—Langley City and from Kingston and the Islands for their help with this proposal.

The bill is based upon a policy initiative that was under development under both Conservative and Liberal governments. It relies upon work done within Parks Canada in anticipation of such a tax credit proposal, including the development of the national register of historic places.

I appeal to all members of the House to consider the bill in that non-partisan spirit as a genuine effort we can all support to make our communities better places to live.

It is important to observe that the reach of this tax credit is managed. Not every old building in Canada will be eligible. Only buildings on the national register of historic sites will qualify. These are generally the most important of the buildings that receive heritage designation under provincial or territorial law.

The bill would also give the minister the power to extend the credit to all heritage designated properties in a province or territory, but that is a decision that will belong to the minister. This protection would ensure that the cost to the public purse of the credit would remain manageable and it would prevent any abuse aimed at taking inappropriate advantage of the new tax credit.

The bill would also ensure that the taxpayers' exposure is controlled in another way. Only costs directly related to restoration of the heritage features would be eligible. A professional licensed architect would have to certify both those costs and that the work is done in accordance with the “Standards and Guidelines for the Conservation of Historic Places in Canada”, a document prepared by Parks Canada in anticipation of exactly an initiative like this bill. The structure of how the credit works would also eliminate the need to create any new bureaucracy to manage the program, further minimizing any costs to the public purse.

In fact, the annual impact on federal finances of this program applied to historic properties all across Canada will still be but a tiny fraction of the $3-billion cost of the restoration of the Parliament buildings currently under way.

The support for the bill is strong. The National Trust for Canada, a national non-profit organization committed to working to save historic places in Canada, has urged support for the bill.

In the 30 years between 1970 and 2000, Canada lost more than 20 per cent of its historic building stock, and losses continue apace.... [Bill C-323] would transform the economic fundamentals for renewing historic places, with spin-off effects including the creation of more skilled jobs and less environmental impact and waste than new construction.

The Royal Architectural Institute of Canada supports the bill, and notes that:

Policies that promote preservation and re-use of historic properties have demonstrated huge economic returns on investment through job retention and creation, tourism, and enhanced property values.

Heritage Winnipeg notes the similarity of the bill to the heritage restoration tax credit south of the border, which they call a great U.S. success story with a 40-year track record. Bill C-323 “presents an historic opportunity”, they note.

Montreal Mosaic, a partnership of non-profit community organizations, calls for support of the bill based on its economic, environmental and historic benefits.

Heritage B.C. says this is something the heritage community has wanted for a long time:

It's consistent with our goals to preserve cultural heritage. It seeks to do that by creating an incentive to rehabilitate heritage buildings rather than to replace them.

Right here in this city, Heritage Ottawa says it strongly supports Bill C-323.

All across the country, municipal councils, the folks who are on the front lines, are balancing private property rights against the public interest in preserving built heritage, and they have to struggle with those very difficult decisions. One after another, those municipal councils are passing resolutions endorsing the bill.

When we think of the places we love to visit around the world, built heritage figures prominently. From the French Quarter in New Orleans to the Great Wall of China, from the Taj Mahal in India to the castles of Prague. The same is true in Canada. From the Grande Allée in Quebec City to Stephen Avenue in Calgary, from Peake's Wharf in Charlottetown to the distillery district in Toronto, we are drawn to these beautiful, story-filled places, and it is their historic buildings that define them. They become the places people go to visit, to learn, to shop, and to dine.

This demonstrates that we value and enjoy the historic buildings and the environment they create. It is where we want to be, and of course, the bill has the potential to aid the restoration of our historic buildings, not just in our big cities. It can lead to the rescue and restoration of important elements of Canada's built heritage in all parts of our country, in rural hamlets and small towns, and occasionally even places in our wilderness. Our history can come to life everywhere.

In Canada, however, we have been the victim of twin arguments that lead people to undervalue our history and our built heritage. First is the traditional student's lament, that Canadian history is boring. In fact, nothing could be farther from the truth. Certainly, our body count falls far short of that of the old world, and we lack the marketing hype of the history of our American neighbours, but Canada's stories are more intriguing than most, drawing in strands from the European and the U.S. experience as input into the history we have made in building this unique and wonderful country, more near to perfect than any other, I would argue.

Indeed, most of those who have grown to know and love our country's history have travelled that path guided by heritage buildings that were the gateways to the stories of the past.

Think of them: the tower on Signal Hill looking out over the Atlantic Ocean, the place where so many explorers came as they opened up this continent; Province House in Charlottetown, Prince Edward Island, the cradle of our Confederation. We think of the Citadelle in Quebec and the old walls of Quebec City that stood witness to the battle on the Plains of Abraham, which changed our destiny here in the North American continent; and, of course, in Halifax Pier 21, which welcomed so many who came to build this country. There is the Old Port of Montreal, which spoke to the burgeoning growth of a Canadian economy. There is Fort George in Niagara-on-the-Lake that bore witness to the battles of the War of 1812, which determined our destiny as a separate people here on the North American continent, different from our neighbours to the south.

One can go to the railway station in Winnipeg, and others across the country, to learn and understand the tremendous role that railways played in the binding together and the building of this country, and the growth of our economies, both rural and urban. When one goes to the Palliser Hotel in Calgary, one sees the dynamism of that city and the promise it held for the future; and, of course, the old Hotel Vancouver, and so many other buildings there, speaks to the tremendous other side of Canada's history.

Again, built form is the core of it all. Indeed, built form tells us who we are and where we came from, and that is what inspires those who love history.

The other argument is that we are a young country and thus lack history and any built heritage worthy of preservation. Never mind the list I gave, that certainly is not true. With four centuries of history comes 400 years of built heritage, and we have had none of it wiped out in the carpet bombing of a world war, as has happened in other places.

Canada is filled with built heritage treasures, but we keep losing them. For example, Toronto has seen other losses recently, including the demolition of the iconic Stollerys building frontage at Yonge and Bloor; incidentally, once the men's wear business owned by a former member of this House for a Spadina riding. The beautiful Empress Hotel at the corner of Yonge and Gould was also recently lost.

The great architect and author, Eric Arthur, in his 1964 book, Toronto, No Mean City, lamented, “In the march of progress, we have ruthlessly destroyed almost all our older architecture..”. His books documented beautiful treasures of buildings that were lost to the wrecker's ball. One can only wistfully dream of what character that city would exude had some of those jewels survived. As he said, “surely no city in the world with a background of three hundred years does so little to make that background known”.

While the generations that preceded us have allowed much of our story to be lost, with this bill we have the opportunity to bestow a gift to future generations. That is the gift of seeing, knowing, and understanding where they came from, the roots of their communities as reflected in a preserved and restored built heritage.

As we celebrate the 150th anniversary of Confederation, Bill C-323 presents us with an opportunity to make Canada's history, in the form of its built heritage, an enduring legacy to benefit Canadians for years to come. It is a fitting year to adopt this policy, which is perhaps long overdue, but which would deliver lasting benefits for generations to come. The 150th anniversary of Confederation is indeed an opportunity for us to focus, both on that past, but on how we can tie that past to the future for the generations to come, how we can make that meaning of all that Canada is meaningful forever. Preserving our built heritage is a big part of that.

I have several other private member's bills. I selected to proceed with this one. I have two others that dealt specifically with Canada's built heritage, other important historical buildings that are at some risk. One is the birthplace of John Diefenbaker, a place in Neustadt, Ontario, which I thought would be most appropriate to have purchased and acquired and run as a museum for the benefit of all Canadians. Indeed, former Prime Minister Harper made that commitment under the previous government. Sadly, that appears not to be happening. That building is at risk and may forever be lost.

Another that I believe should be a museum is the summer home of John A. Macdonald in Rivière-du-Loup, a place that hosted cabinet meetings. People talk about the “winter White House” in Mar-a-Lago right now. The home in Rivière-du-Loup was the “summer 24 Sussex” before there even was a 24 Sussex. That is where the government operated for some time during the summers.

Fortunately, that has been saved by a group of benevolent citizens through something called Canadian Heritage of Quebec. By contract, it runs it as a bed and breakfast, but its existence is precarious. It is not only something that could benefit from a tax credit such as this but something that is worthy of even greater support.

I chose to proceed with this bill, because it has the potential to benefit properties all across Canada. To help protect that built heritage for our future generations, to help us know ourselves and our history much better, I urge all members of the House to support it.

[Peter Van Loan, Conservative, York—Simcoe, ON]

moved for leave to introduce Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property).

Mr. Speaker, this bill creates a tax credit for the rehabilitation of historic buildings in Canada. It is designed to help those who invest in our cultural heritage.

It is a meaningful measure to strengthen heritage infrastructure. By maintaining historic buildings and undertaking costly heritage renovations, citizens undertake a considerable private burden from which we all benefit through the preservation of our past and the places that have made our country. This bill seeks, in a small way, to provide some support for them for the considerable investment they make on behalf of all of us.

With the 150th anniversary of Confederation nearing, this bill is an opportunity for all members of the House to show their support for preserving Canada's built heritage. These changes will help save our most important historical structures for our children and grandchildren to enjoy for generations to come.

(Motions deemed adopted, bill read the first time and printed)