Bill C-44 (Historical)

Budget Implementation Act, 2017, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures

Part 1 implements certain income tax measures proposed in the March 22, 2017 budget by
(a) eliminating the investment tax credit for child care spaces;
(b) eliminating the deduction for eligible home relocation loans;
(c) ensuring that amounts received on account of the caregiver recognition benefit under the Veterans Well-being Act are exempt from income tax;
(d) eliminating tax exemptions of allowances for members of legislative assemblies and certain municipal officers;
(e) eliminating the tax exemption for insurers of farming and fishing property;
(f) eliminating the additional deduction for gifts of medicine;
(g) replacing the existing caregiver credit, infirm dependant credit and family caregiver tax credit with the new Canada caregiver credit;
(h) eliminating the public transit tax credit;
(i) ensuring certain costs related to the use of reproductive technologies qualify for the medical expense tax credit;
(j) extending the list of medical practitioners that can certify eligibility for the disability tax credit to include nurse practitioners;
(k) extending eligibility for the tuition tax credit to fees paid for occupational skills courses at post-secondary institutions and taking into account such courses in determining whether an individual is a qualifying student under the Income Tax Act;
(l) extending, for one year, the mineral exploration tax credit for flow-through share investors;
(m) eliminating the tobacco manufacturers’ surtax;
(n) permitting employers to distribute T4 information slips electronically provided certain conditions are met; and
(o) delaying the repeal of the provisions related to the National Child Benefit supplement in the Income Tax Act.
Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures proposed in the March 22, 2017 budget by
(a) adding naloxone and its salts to the list of GST/HST zero-rated non-prescription drugs that are used to treat life-threatening conditions;
(b) amending the definition of “taxi business” to require, in certain circumstances, providers of ride-sharing services to register for the GST/HST and charge GST/HST in the same manner as taxi operators; and
(c) repealing the GST/HST rebate available to non-residents for the GST/HST that is payable in respect of the accommodation portion of eligible tour packages.
Part 3 implements certain excise measures proposed in the March 22, 2017 budget by
(a) adjusting excise duty rates on tobacco products to account for the elimination of the tobacco manufacturers’ surtax; and
(b) increasing the excise duty rates on alcohol products by 2% and automatically adjusting those rates annually by the Consumer Price Index starting in April 2018.
Part 4 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 4 amends the Special Import Measures Act to provide for binding and appealable rulings as to whether a particular good falls within the scope of a trade remedy measure, authorities to investigate and address the circumvention of trade remedy measures, consideration of whether a particular market situation is rendering selling prices in an exporting country unreliable for the purposes of determining normal values and the termination of a trade remedy investigation in respect of an exporter found to have an insignificant margin of dumping or amount of subsidy.
Division 2 of Part 4 enacts the Borrowing Authority Act, which allows the Minister of Finance to borrow money on behalf of Her Majesty in right of Canada with the authorization of the Governor in Council and provides for the maximum amount of certain borrowings. The Division amends the Financial Administration Act and the Hibernia Development Project Act to provide that the applicable rate of currency exchange quoted by the Bank of Canada is its daily average rate. It also amends the Financial Administration Act to allow that Minister to choose a rate of currency exchange other than one quoted by the Bank of Canada. Finally, it makes a consequential amendment to the Budget Implementation Act, 2016, No. 1.
Division 3 of Part 4 amends the Canada Deposit Insurance Corporation Act and the Bank Act to
(a) specify that one of the objects of the Canada Deposit Insurance Corporation is to act as the resolution authority for its member institutions;
(b) require Canada’s domestic systemically important banks to develop, submit and maintain resolution plans to that Corporation; and
(c) provide the Superintendent of Financial Institutions greater flexibility in setting the requirement for domestic systemically important banks to maintain a minimum capacity to absorb losses.
Division 4 of Part 4 amends the Shared Services Canada Act in order to permit the Minister responsible for Shared Services Canada to do the following, subject to any terms and conditions that that Minister specifies:
(a) delegate certain powers given to that Minister under that Act to an “appropriate Minister”, as defined in section 2 of the Financial Administration Act; and
(b) authorize in exceptional circumstances a department to obtain a particular service other than from that Minister through Shared Services Canada, including by meeting its requirement for that service internally.
Division 5 of Part 4 authorizes a payment to be made out of the Consolidated Revenue Fund to the Canadian Institute for Advanced Research to support a pan-Canadian artificial intelligence strategy.
Division 6 of Part 4 amends the Canada Student Financial Assistance Act to expand eligibility for student financial assistance under that Act to include persons registered as Indians under the Indian Act, whether or not they are Canadian citizens, permanent residents or protected persons. It also amends the Canada Education Savings Act to permit the primary caregiver’s cohabiting spouse or common-law partner to designate a trust to which is to be paid a Canada Learning Bond or an additional amount of a Canada Education Savings grant and to apply to the Minister for the waiver of certain requirements of that Act or the regulations to avoid undue hardship. It also amends that Act to provide rules for the payment of an additional amount of a Canada Education Savings grant in situations where more than one trust has been designated.
Division 7 of Part 4 amends the Parliament of Canada Act to provide for the Parliamentary Budget Officer to report directly to Parliament and to be supported by an office that is separate from the Library of Parliament and to provide for the appointment and tenure of the Parliamentary Budget Officer to be that of an officer of Parliament. It expands the Parliamentary Budget Officer’s right of access to government information, clarifies the Parliamentary Budget Officer’s mandate with respect to the provision of research, analysis and costings and establishes a new mandate with respect to the costing of platform proposals during election periods. It also makes consequential amendments to certain Acts.
This Division also amends the Parliament of Canada Act to provide that the meetings of the Board of Internal Economy of the House of Commons are open, with certain exceptions, to the public.
Division 8 of Part 4 amends the Investment Canada Act to provide for an immediate increase to $1 billion of the review threshold amount for certain investments by WTO investors that are not state-owned enterprises. In addition, it requires that the report of the Director of Investments on the administration of that Act also include Part IV.‍1.
Division 9 of Part 4 provides funding to provinces for home care services and mental health services for the fiscal year 2017–2018.
Division 10 of Part 4 amends the Judges Act to implement the Response of the Government of Canada to the Report of the 2015 Judicial Compensation and Benefits Commission. It provides for the continued statutory indexation of judicial salaries, an increase to the salaries of Federal Court prothonotaries to 80% of that of a Federal Court judge, an annual allowance for prothonotaries and reimbursement of legal costs incurred during their participation in the compensation review process. It also makes changes to the compensation of certain current and former chief justices to appropriately compensate them for their service and it makes technical amendments to ensure the correct division of annuities and enforcement of financial support orders, where necessary. Finally, it increases the number of judges of the Court of Queen’s Bench of Alberta and the Yukon Supreme Court and increases the number of judicial salaries that may be paid under paragraph 24(3)‍(a) of that Act from thirteen to sixteen and under paragraph 24(3)‍(b) from fifty to sixty-two.
Division 11 of Part 4 amends the Employment Insurance Act to, among other things, allow for the payment of parental benefits over a longer period at a lower benefit rate, allow maternity benefits to be paid as early as the 12th week before the expected week of birth, create a benefit for family members to care for a critically ill adult and allow for benefits to care for a critically ill child to be payable to family members.
This Division also amends the Canada Labour Code to, among other things, increase the maximum length of parental leave to 63 weeks, extend the period prior to the estimated date of birth when the maternity leave may begin to 13 weeks, create a leave for a family member to care for a critically ill adult and allow for the leave related to the critical illness of a child to be taken by a family member.
Division 12 of Part 4 amends the Canadian Forces Members and Veterans Re-establishment and Compensation Act to, among other things,
(a) specify to whom career transition services may be provided under Part 1 of the Act and authorize the Governor in Council to make regulations respecting those services;
(b) create a new education and training benefit that will provide a veteran with up to $80,000 for a course of study at an educational institution or for other education or training that is approved by the Minister of Veterans Affairs;
(c) end the family caregiver relief benefit and replace it with a caregiver recognition benefit that is payable to a person designated by a veteran;
(d) authorize the Minister of Veterans Affairs to waive the requirement for an application for compensation, services or assistance under the Act in certain cases;
(e) set out to whom any amount payable under the Act is to be paid if the person who is entitled to that amount dies before receiving it; and
(f) change the name of the Act.
The Division also amends the Pension Act and the Department of Veterans Affairs Act to remove references to hospitals under the jurisdiction of the Department of Veterans Affairs as there are no longer any such hospitals.
Finally, it makes consequential amendments to other Acts.
Division 13 of Part 4 amends the Immigration and Refugee Protection Act to
(a) provide that a foreign national who is a member of a certain portion of the class of foreign nationals who are nominated by a province or territory for the purposes of that Act may be issued an invitation to make an application for permanent residence only in respect of that class;
(b) provide that a foreign national who declines an invitation to make an application in relation to an expression of interest remains eligible to be invited to make an application in relation to the same expression of interest;
(c) authorize the Minister to give a single ministerial instruction that sets out the rank, in respect of different classes, that an eligible foreign national must occupy to be invited to make an application;
(d) provide that a ministerial instruction respecting the criteria that a foreign national must meet to be eligible to be invited to make an application applies in respect of an expression of interest that is submitted before the day on which the instruction takes effect;
(e) authorize the Minister, for the purpose of facilitating the selection of a foreign national as a member of a class or a temporary resident, to disclose personal information in relation to the foreign national that is provided to the Minister by a third party or created by the Minister;
(f) set out the circumstances in which an officer under that Act may issue documents in respect of an application to foreign nationals who do not meet certain criteria or do not have the qualifications they had when they were issued an invitation to make an application; and
(g) provide that the Service Fees Act does not apply to fees for the acquisition of permanent residence status or to certain fees for services provided under the Immigration and Refugee Protection Act.
Division 14 of Part 4 amends the Employment Insurance Act to broaden the definition of “insured participant”, in Part II of that Act, as well as the support measures that may be established by the Canada Employment Insurance Commission. It also repeals certain provisions of that Act.
Division 15 of Part 4 amends the Aeronautics Act, the Navigation Protection Act, the Railway Safety Act and the Canada Shipping Act, 2001 to provide the Minister of Transport with the authority to enter into agreements respecting any matter for which a charge or fee could be prescribed under those Acts and to make related amendments.
Division 16 of Part 4 amends the Food and Drugs Act to give the Minister of Health the authority to fix user fees for services, use of facilities, regulatory processes and approvals, products, rights and privileges that are related to drugs, medical devices, food and cosmetics. It also gives that Minister the authority to remit those fees, to adjust them and to withhold or withdraw services for the non-payment of them. Finally, it exempts those fees from the Service Fees Act.
Division 17 of Part 4 amends the Canada Labour Code to, among other things,
(a) transfer to the Canada Industrial Relations Board the powers, duties and functions of appeals officers under Part II of that Act and of referees and adjudicators under Part III of that Act;
(b) provide a complaint mechanism under Part III of that Act for employer reprisals;
(c) permit the Minister of Labour to order an employer to determine, following an internal audit, whether it is in compliance with a provision of Part III of that Act and to provide the Minister with a corresponding report;
(d) permit inspectors to order an employer to cease the contravention of a provision of Part III of that Act;
(e) extend the period with respect to which a payment order to recover unpaid wages or other amounts may be issued;
(f) impose administrative fees on employers to whom payment orders are issued; and
(g) establish an administrative monetary penalty scheme to supplement existing enforcement measures under Parts II and III of that Act.
This Division also amends the Wage Earner Protection Program Act to transfer to the Canada Industrial Relations Board the powers, duties and functions of adjudicators under that Act and makes consequential amendments to other Acts.
Division 18 of Part 4 enacts the Canada Infrastructure Bank Act, which establishes the Canada Infrastructure Bank as a Crown corporation. The Bank’s purpose is to invest in, and seek to attract private sector and institutional investment to, revenue-generating infrastructure projects. The Act also provides for, among other things, the powers and functions of the Bank, its governance framework and its financial management and control, allows for the appointment of a designated Minister, and provides that the Minister of Finance may pay to the Bank up to $35 billion and approve loan guarantees. Finally, this Division makes consequential amendments to the Access to Information Act, the Financial Administration Act and the Payments in Lieu of Taxes Act.
Division 19 of Part 4 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things, expand the list of disclosure recipients to include the Department of National Defence and the Canadian Armed Forces and to include beneficial ownership information as “designated information” that can be disclosed by the Financial Transactions and Reports Analysis Centre of Canada. It also makes several technical amendments to ensure that the legislation functions as intended and to clarify certain provisions, including the definition of “client” and the application of that Act to trust companies.
Division 20 of Part 4 enacts the Invest in Canada Act. It also makes consequential and related amendments to other Acts.
Division 21 of Part 4 enacts the Service Fees Act. The Act requires responsible authorities, before certain fees are fixed, to develop fee proposals for consultation and to table them in Parliament. It also requires that performance standards be established in relation to certain fees and that responsible authorities remit those fees when the standards are not met. It adjusts certain fees on an annual basis in accordance with the Consumer Price Index. Furthermore, it requires responsible authorities and the President of the Treasury Board to report on fees. This Division also makes a related amendment to the Economic Action Plan 2014 Act, No. 1 and terminological amendments to other Acts and repeals the User Fees Act.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay.

I'll refer to a question I asked the Minister of Finance. He didn't give me a detailed answer.

The purpose and functions part contains section 6 of the Canada Infrastructure Bank Act, which establishes the Canada Infrastructure Bank. The section refers to infrastructure projects that will generate revenue. It's not clear to me how infrastructure can generate revenue.

Can you provide an example of how infrastructure, such as a bridge or road, generates revenue?

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Madam Chair, I have some questions for you.

I apologize to the witnesses, but it will take only 30 seconds.

You know that I will be in the chair for the last hour, so I would like some clarification on two questions, Madam Chair.

First, we had unanimously agreed to invite representatives from Aéroports de Montréal and the Service de police de la Ville de Montréal for our study of aviation safety. I have had an opportunity to speak with representatives of Aéroports de Montréal. They told me that they were prepared to come here, but today's date did not work for them. However, they were interested in appearing. Is it possible to plan an additional meeting so we can hear from them? I think it would be useful, for the purposes of our study.

Second, I have learned from my colleagues on the Standing Committee on Finance that you had sent a letter concerning the response of the Standing Committee on Transport, Infrastructure and Communities to Bill C-44. Unfortunately, I do not have a copy. In the letter, you stated that the members of our committee have until May 19, that is, tomorrow, to inform the Standing Committee on Finance of their recommendations. How do you want us to make recommendations to the Standing Committee on Finance if the members of this committee itself have not been informed that this possibility was open to them?

I would like some clarification on those two questions, please.

[The Chair, Liberal, Wayne Easter]

I call the meeting to order. For the record, we're continuing to deal with Bill C-44, an act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures. We will start where we left off with witnesses from the Treasury Board Secretariat on part 4, division 21.

The floor is yours, Mr. Ermuth. I believe you had finished your remarks. Is that correct?

[Morna Ballantyne]

Our position—and it's set out in the brief—is that the changes that should be made are to bring the employment insurance program in line with the one in Quebec. It makes no sense that citizens and workers in one province would have superior benefits to those in the rest of the country. That is our position. We propose that your committee should recommend that in studying Bill C-44, because that is not, in fact, what is being advanced in Bill C-44.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Exactly. I think this also sheds light on one of the issues raised. A public servant had no choice but to recognize that one of issues is only four out of ten employees can access the employment insurance program. The public servant confirmed that, to access the parental insurance program, workers must be eligible for employment insurance. Obviously, workers have a problem.

We're currently studying Bill C-44. Do you think the removal of this aspect and the increase in payments, with a percentage higher than 55%, would be a solution? Is 55% of the salary enough?

[Morna Ballantyne, Executive Director, Child Care Advocacy Association of Canada]

Thank you very much, Mr. Chair and members of the committee, for the invitation to be here with you this afternoon. I'll try to get through this before the bell rings.

There is no longer any dispute that parents in Canada with young children are in desperate need of greater government support. High-quality child care is limited and financially out of reach for the great majority of families. Consequently parents, and particularly mothers, are forced to find alternatives. They withdraw from the paid workforce, lessen their attachment to it, or delay entry, or they turn to more affordable, lower-quality, makeshift child care arrangements. The damage to children's well-being, to women's economic equality, to family security, and to the Canadian economy is severe and well documented.

The Liberal Party of Canada's election platform promised economic security for the middle class and help for modern Canadian families. As part of this commitment, Canadians were told that the Liberal Government would ensure the availability of “affordable”, “high-quality”, and “fully inclusive” child care for all families who need it.

Neither the first or second Liberal government budget delivers on that promise. The 2016 budget gave only one year of funding for early learning and child care in 2017. The 2017 budget allocates funding in each subsequent year until 2028, and yet the sum of money to be transferred to the provinces and territories each year falls far, far short of what is required to build a fully comprehensive child care system over the next 10 years. The funding starts in 2017 at only $500 million. By 2022 it will have increased by only $50 million. That amount has to be divided up between 10 provinces and three territories. To put this in perspective, the Province of Quebec alone already spends $2.5 billion a year on its child care program.

Further, following the tabling of the budget, both the Prime Minister and the Minister of Families, Children and Social Development publicly stated that the government's intention is not to help all families access affordable child care but rather to target the support to those with low and modest incomes. In other words, they are abandoning the middle class when it comes to child care. They are acting in direct opposition to the contemporary international consensus and the overwhelming research that affirms that a universal approach is more effective than a targeted one. Only a universal and comprehensive approach can generate the well-documented economic benefits of early childhood education and care, help all Canadian families and give them the choices of child care that they seek, and sustain ongoing public support.

More importantly, the research tells us that universal early childhood education and care is the best way to meet the developmental goals we wish for all children, regardless of their family's social or economic status. The direction that the government is taking on child care is not just insufficient. It also it runs contrary to evidence and actually sets us back.

This is also true of the related changes to the maternity and parental EI benefits set out in Bill C-44. During the public consultation process on these changes, the most common reason given by those who supported the government's proposal to extend the leave period to 18 months was the lack of available affordable child care for children under 18 months. However, reducing parents' EI parental benefits so that they can stay on leave longer is a bad substitute for affordable quality child care for all. What would really help working parents before and after the birth or adoption of children, in addition to affordable child care, would be easier access to maternity and parental benefits and higher benefits. As it is, too many parents don't qualify or can't afford to forfeit their regular paycheques. Changing the EI program in line with the already tested Quebec parental insurance program, the QPIP, would be a much more positive step forward.

I have provided to the clerk of your committee our organization's very short brief on the proposed changes and why we think they are wrong. I hope you will give it consideration as you debate division 11, part 4, of Bill C-44 .

Thanks for your consideration.

[Dr. Carolyn Pullen, Director, Policy, Advocacy and Strategy, Canadian Nurses Association]

Thank you. I've timed my speaking to less than five minutes.

I'm a registered nurse myself, and I'm here representing the CNA, the professional association for close to 140,000 nurses in Canada. I'm pleased to speak today about the measures related to nurse practitioners in Bill C-44. The measures are under part 4, division 11, which focuses on support for families through benefits and leaves in both the Employment Insurance Act and the Canada Labour Code. As for part 1, we are pleased that the Income Tax Act now includes nurse practitioners, NPs, under the list of health care providers who can certify eligibility for disability tax credits. This measure was effective on budget day.

As our president noted on budget day, these changes are long-awaited breakthroughs for patients and nurse practitioners, and we hope they set the precedent for similar modernization of other related legislation. We're thankful that the Minister of Finance included these measures in Bill C-44. Along with the Canadian Association of Advanced Practice Nurses, we encourage members of the committee to accept the amendments that have been proposed for both the Employment Insurance Act and the Canada Labour Code. The amendments formally acknowledge nurse practitioners and enable them to fulfill their important role as primary care providers, particularly for Canadians who live in rural and remote locations in Canada.

Members of the committee are also aware that the Standing Senate Committee on Social Affairs, Science and Technology will be discussing a pre-study on division 11 of the bill, and we encourage them to support these amendments as well.

In order for us to have a sustainable health care system where services are accessible to all Canadians, health professionals must be permitted to practice to the full extent of their regulated qualifications. For nurse practitioners, these qualifications include the ability to perform comprehensive patient assessments and to complete related documentation. I'll give you a brief overview of the nurse practitioner role to illustrate the benefits of these amendments. Nurse practitioners are registered nurses with additional, graduate-level education and extensive, specialized health care experience. It's a protected title, and it has been regulated across Canada since the early nineties. Today, almost 5,000 nurse practitioners provide care to over three million Canadians. Within their scope of practice, they conduct physical assessments, order and interpret tests, admit and discharge to hospital, and prescribe medication. As you know, they can provide medical assistance in dying. They complete advanced practice examinations, and they must be registered with their nursing regulatory body in order to practice.

While nurse practitioners work in diverse settings, urban and rural, they are commonly the first point of contact for primary care, particularly in rural and remote communities. Like many primary care practitioners, it's not unusual for nurse practitioners to have a patient panel of over 10,000 patients. It's very broad in scope. If you just look within the first nations and Inuit health branch, the nurse-to-physician ratio for primary care in rural and remote communities is more than 26 to one. This illustrates the scale of care provided by nurse practitioners. They truly are the gateway to care.

It's clear from this how outdated legislation, drafted before nurse practitioners were recognized as a protected title and became key primary care providers.... These barriers are real, and they prevent access for many Canadians, particularly indigenous peoples, for whom the most local care is likely through a nurse practitioner. Including nurse practitioners among those who can complete documentation such as the medical certificate for employment insurance or compassionate care benefits gives patients increased access to benefits to which they are entitled. Unnecessary personal costs to individuals will be avoided. Duplication of services between nurses and physicians will be reduced. In the end, red tape will be cut. Canadians will have better access to care and better value for their tax dollars.

Finally, our expectation is that these cost-effective changes will trigger a similar modernization of legislation at the provincial and territorial levels. Similar modernization must still be made to include NPs as qualified medical practitioners under the Employment Insurance Act, specifically to include NPs in sections 54 and four sections of the employment insurance regulations. Further, five sections of the Canada Labour Code and proposed subsection 207.2(4) in Bill C-44 must similarly be amended.

In closing, I encourage members of this committee to support the bill, as its measures will improve access to care for over three million Canadians. As well, we are of the belief that the additional sections that do not add NPs must be implemented in this important bill.

Thank you to the committee. I look forward to your questions.

[Rob Cunningham, Senior Policy Analyst, Canadian Cancer Society]

Thank you, Chair and members of the committee.

My name is Rob Cunningham. I'm a lawyer and senior policy analyst with the Canadian Cancer Society.

Thank you for giving me the opportunity to speak today on behalf of the Canadian Cancer Society.

Most of my testimony will deal with clause 51 in Bill C-44 in supporting the tobacco tax increase found there, but first I would like to mention two other items in the budget.

I would like to convey our support for the investment in home and palliative care that is included in the budget. It's been estimated that 80% of those receiving palliative care are cancer patients. This will make a real difference and improve the lives of cancer patients and their families.

Second, we support the introduction of a new and more flexible employment insurance caregiver benefit. Caregivers provide assistance and key services to thousands of cancer patients every year in Canada while bearing a significant personal and financial burden. This new benefit will help and has our support.

Turning to tobacco, it remains the case that smoking causes 30% of cancer deaths in Canada. We've made progress, but more than five million Canadians still smoke. It's the leading preventable cause of disease and death. Higher tobacco taxes are the most effective strategy to reduce smoking, especially among kids, who have less disposable income, are less likely to be addicted, and are more responsive to price.

You have a handout from us. The graph shows the comparative provincial and territorial tobacco tax rates. The blue shows the rate. The mauve shows the GST and the PST, the provincial portion of the HST. We can see that in Ontario and Quebec the rate is much lower than in other provinces. The green shows budget announcements that are not yet implemented, where there's a scheduled date to come. On the far right of the graph is the federal tobacco tax, which is now lower—by quite a bit—than that of most provinces. The yellow is the 53¢ increase per carton in the budget, so it's small, but every bit helps. This just gives a bit of context for this increase.

The next page shows the trends in federal and provincial government tobacco tax revenue, not including GST, HST, or sales taxes. There are objectives to increase public revenue, in addition to benefiting public health, and we've seen an increase in tobacco tax revenue. That's the idea. The blue line shown there is after inflation, so it's not as much, but in both cases I think it's quite impressive, because there's been a decrease in the smoking public, yet tobacco tax revenue is going up.

The third page shows a newspaper headline saying that in Australia a package of cigarettes is going to be costing $40 in 2020.

The final page compares Australian and Canadian tobacco taxes. Quebec, on the far left, has the lowest tax of any province in Canada, while Manitoba has the highest. In Australia today, it's far higher at $148 per carton—the Canadian and Australian dollars are almost at par—with further scheduled increases by 2020. It's going to go up quite a lot more. Based on Australia, we haven't come close to the ceiling of what is possible. In Canada, we—

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I want to thank everyone for being here. Sorry for the interruptions.

I want to talk again about the transition from military life to civilian life experienced by many military members each year.

Bill C-44 contains new measures, in particular regarding the education and training people can receive when they want to head in another direction or maybe change careers, and regarding the transition services that will be provided for veterans so they can look for jobs, and so on. I'll focus on these issues.

What's currently available to veterans and military members in terms of education and training after military service? How will the new benefit help better meet the needs of military members and veterans? Was this program requested by veterans? Is the request being properly addressed?

[The Chair, Liberal, Wayne Easter]

We'll come to order. We're pleased to have witnesses here this afternoon for our further discussions on Bill C-44, an act to implement certain provisions of the budget tabled in Parliament.

As the witnesses know, the bells are ringing. We think that we have time to hear everybody's presentation. We will go to vote and then come back and spend a half an hour, or thereabouts, on questions for witnesses.

The first witnesses are from the Equitas Society. We have Mr. Bedard, who is the representative, and Mr. Campbell.

The floor is yours.

Government Appointments

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, everyone in the francophonie recognizes that she was the best Liberal available for the job.

On another topic, we know that Bill C-44 is an omnibus bill that goes against the Liberals' campaign promises. This bill also provides for the creation of the infrastructure bank. The bill has not even been passed and the government is already in the process of appointing the chair of this bank.

Does the Prime Minister realize that not only is he breaking his election promises, but, more importantly, that he is flouting Parliament's authority?

[David Macdonald]

Maybe we'll see. There is probably broad agreement that the costs of the infrastructure bank should be borne by the infrastructure borrowers at the end of the day. It's a real question for this committee as to this bank's goal. Is it to reduce interest rate costs, to use the position of the federal government's low interest rate in order to reduce costs for the cities that are going to use this money? Is it a vehicle for investors to get the 7% or 9% they need to pay back the needed returns on the pension plans? It could go either way. It's the decision of this committee.

At present none of the functions as listed in Bill C-44 state that the goal of the bank is to produce rock-bottom interest rates for municipalities. Interest rates are not discussed in the functions of the bank. The investors and the needs of the investors are discussed in the functions of the bank.

[Mark Romoff, President and Chief Executive Officer, Canadian Council for Public-Private Partnerships]

Good afternoon.

Thank you, Mr. Chair, co-chairs, and committee members, for inviting me to appear here today.

I'm pleased to speak before the committee on behalf of the council, which is a not-for-profit, non-partisan, member-based organization, with broad representation from across all levels of government in Canada and the private sector. Its mission is to promote smart, innovative, and modern approaches to infrastructure development and service delivery, through public-private partnerships. The council is a proponent of evidence-based public policy, educates stakeholders and the community on the economic and social benefits of public-private partnerships, and facilitates the adoption of international best practices to make sure we continue to be the very best at what we do.

I should emphasize that the council is not a lobby group. Rather it works as a partner with governments, to enable them to achieve the best outcomes and the best value for taxpayers from their respective infrastructure investments.

The council is pleased to speak today in support of Bill C-44, in particular the act to establish the Canada infrastructure bank.

I know committee members are well aware that, irrespective of the size of Canada's infrastructure deficit, which some estimates peg at about $1 trillion, and the fiscal challenges all governments across the country face, continued investment in infrastructure is absolutely critical, because it drives job creation, productivity, economic growth and prosperity, and global competitiveness. That's why the council has supported long-term infrastructure programs by successive governments to tackle the infrastructure deficit in this country. Notable in this regard, of course, is the unprecedented and ambitious federal investment of $186 billion over the next 12 years.

We will be the first to say government cannot do this alone. Governments at every level do not have enough money or expertise to build the world-class infrastructure needed to grow Canada's economy and improve the social well-being of our citizens. That's why the establishment of the Canada infrastructure bank is such an attractive, innovative, and timely initiative.

The bank's mission, as you know, is to deliver revenue-generating infrastructure by attracting private capital investors. The injection of private financing means government is in a position to make better use of public funding for a broader range of infrastructure projects, such as new water systems, social housing, recreational and cultural facilities, and on-reserve infrastructure.

Canada has a strong record of success when partnering with the private sector. Engaging the private sector in the design, construction, financing, maintenance, and even the operation of critical public infrastructure is not a new idea in Canada. We have a long and successful history of public-private partnerships in this country. The Canadian model has delivered high-quality infrastructure, built on time and on budget, and demonstrating exceptional value for taxpayers. This is primarily because of the rigour and discipline the private sector brings to the procurement process.

There are currently 258 P3s across Canada. Those facilities that are already in operation or under construction have a value of more than $122 billion, and include a broad range of projects, like hospitals and long-term health care facilities, roads, bridges, public transit, and water and waste-water treatment facilities. It's important to stress that these projects in every instance remain publicly owned and publicly controlled. This is in no way privatization of government assets.

The Canadian Centre for Economic Analysis has independently estimated that P3s have saved Canadians as much as $27 billion over the 25 years that they have been in play. These projects have been demonstrated to be built 13% faster than those brought to market in the traditional way, which has added a further $11 billion in value to the Canadian economy.

Most importantly, P3s are creating 115,000 jobs and generating $5 billion of additional wages on average every year. This strong track record of success has resulted in the Canadian P3 approach being recognized around the world as best in class.

Over the years, Nanos Research has shown that seven out of 10 Canadians consistently support P3s and recognize that the private sector is better equipped than government to deliver high-quality projects on time and on budget.

The Canadian P3 experience is evidence that there is no shortage of private capital waiting to be invested in Canadian infrastructure and that the private sector is willing and prepared to take on significant risk to support these projects. We have a funding problem in Canada, not a financing problem. We believe, if structured appropriately, the Canada infrastructure bank can leverage public dollars further by transferring revenue risk and reducing overall public expenditures, while ensuring projects are delivered on time and on budget and that they are well maintained over the life cycle of the asset.

When I say “structured properly”, I mean that each project that comes to the infrastructure bank must first and foremost have a strong business case, and the procurement process that follows must be competitive, efficient, transparent, and fair. It must also be recognized that not all governments have the capacity or expertise to successfully procure the large, complex, revenue-generating projects that will be the purview of the bank.

In these instances, we would urge government to establish a project preparation fund that would be available to less-experienced provinces, territories, municipalities, and indigenous communities in order to enable them to acquire the consulting services and advisers necessary to successfully take their projects to market.

The council sees the Canada infrastructure bank as another tool in the tool kit for governments to deliver more high-quality infrastructure for Canadians and greater economic stability for communities across the country. We believe the bank can draw in more private capital and build on the successful Canadian P3 model. We are the first to say that P3s are not a panacea, but when done for the right reasons and on the right projects, they deliver real results for Canadians.

Now that the location of the bank has been decided, the important next steps are to recruit a high-quality and experienced chair, a board of directors, and a CEO, who together will put the flesh on the bones of this new institution. My council is confident that under strong, capable leadership, the Canada infrastructure bank will be well positioned to continue the country down this path of success, and the council is pleased to support the act that is being considered by this committee.

Thank you very much. I'm happy to take any questions.

[David Macdonald, Senior Economist, National Office, Canadian Centre for Policy Alternatives]

Thank you very much, Mr. Easter, and thanks so much to the committee for their invitation to speak on Bill C-44.

With any budget implementation bill there is always something interesting to say and plenty to say about it. Briefly, I would like to commend this committee on Bill C-44 for closing several of the boutique tax cuts that have been opened over previous years. I hope this committee will continue forward and tackle several of the larger and more regressive tax loopholes later on, like the stock option deduction, or the capital gains inclusion rate.

Today I would like to focus my remarks on the proposed infrastructure bank. First, it's important to note that whatever the structure of the infrastructure bank, loans are a poor substitute for federal funding, and there has been a substantial shift in infrastructure investment and responsibility over the past century. In 1955 the federal government spent 35% of every infrastructure dollar. Today it spends 15%, and it is municipalities that have picked up this slack. They used to spend one-quarter of every infrastructure dollar in 1955. Now they spend close to half. Provincial contributions have remained roughly the same over this period.

The federal government continues to pay the lowest interest rate of any level of government, and enjoys the broadest tax base. Municipalities, on the other hand, face the highest interest rates and the smallest tax base. This cost shift leads to fewer dollars spent on infrastructure, and the costs that are shifted to this lower level of government are shifted to the level of government that is least able to pay them.

As I see it, the main functions of a properly constructed infrastructure bank are, first, to lower interest rates for municipalities, and second, to facilitate the borrowing process. Smaller municipalities, or municipalities unfamiliar with larger projects, would particularly benefit from these functions. However, neither of these straightforward functions is part of the proposed functions listed in the infrastructure bank in Bill C-44.

Municipalities do face higher interest costs than the federal government. I looked up the bond rates this morning for the City of Ottawa, which pays 2.25% on five-year bonds. Halton Region, just outside Toronto, pays 2.54% on five-year bonds. This would be compared with the federal interest rate for federal government bonds of 0.82% on five-year bonds, roughly 1.5% lower than the cities. As with a mortgage, higher interest rates mean higher costs for cities and/or higher user fees for Canadians.

An infrastructure bank could effectively lower borrowing costs close to the federal rate. For its part, the federal borrowing rate is close to a record low, given the incredible demand for federal government bonds. Put another way, investors are desperate for more federal bonds, thus driving up their price and driving down their yield. An infrastructure bank could take advantage of this and pass the savings on to cities.

However, I'm concerned that as structured, the infrastructure bank would not achieve the goal of reducing borrowing costs for cities, but in fact would do the exact opposite. The proposed infrastructure bank appears to serve the needs of investors, not those of cities. In fact, the input of any government is explicitly and oddly not necessary for accessing funds through the infrastructure bank. It appears that public-private partnerships, or P3s, and not low-cost financing will be the focus of the bank. The likely impact will be interest rates to cities of 7% to 9% on infrastructure bank projects instead of 0.08%, the current federal borrowing rate. In other words, the proposed structure will increase interest costs by a factor of 10.

As with a mortgage, substantially higher interest rates mean higher interest rate payments over the life of the project, and those higher costs will be borne by governments or by higher user fees, or both.

Municipalities are not blind to this issue, often preferring public financing due to lower costs as opposed to P3s. This is not a hypothetical problem. In 2014 the Ontario auditor general examined the 26 billion dollars' worth of P3 projects undertaken by the Government of Ontario, an amount, incidentally, similar to what the federal infrastructure bank is considering. She concluded that the P3 structure would add an additional $8 billion in costs over and above the $26 billion of the projects themselves, almost entirely due to higher interest-rate costs, and these much higher costs would be borne by the Ontario government, and ultimately, by Ontarians so that P3 consortiums could see higher profits.

I encourage the committee to refocus the infrastructure bank on driving down interest rates for municipalities while accelerating their access to infrastructure loans.

This refocusing of the bank's priorities on what cities need instead of on investors' needs will best serve Canadians by keeping costs and user fees down, while encouraging cities to use the bank due to its competitive rates.

Thank you very much for your attention, and I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Order. Could we get the members to the table?

We are going to be under a fairly tight time frame because when the bells ring we have no choice but to go, and there are seven minutes left.

As people know, we're meeting on Bill C-44 and we appreciate your coming to make your presentations.

We'll start with you, Mr. Macdonald, senior economist, national office, Canadian Centre for Policy Alternatives.