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.

[The Chair, Liberal, Wayne Easter]

We'll reconvene on Bill C-44. I would ask the witnesses and members to come to the table.

Welcome, folks. We have Normand Lafrenière and Frank Rider from the Canadian Association of Mutual Insurance Companies; Nicholas Rivers, associate professor with the University of Ottawa; and Marc André Way from the Canadian Taxi Association. Other witnesses may arrive shortly. We'll see.

We'll begin with the Canadian Association of Mutual Insurance Companies first.

Mr. Rider, the floor is yours.

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

Thank you, Mr. Chair.

I thank the witnesses for being with us today.

It is rare that we see such unanimity among a group. I hope this will affect our future deliberations.

Just before question period today, the Minister of Finance admitted consulting the BlackRock firm about the creation of the Infrastructure Bank. That firm, which was extensively consulted before the creation of this bank, will certainly profit from it.

In the same vein, I would like to know if some of you were consulted before changes were announced in the context of Bill C-44.

[Joyce Reynolds, Executive Vice-President, Government Affairs, Restaurants Canada]

Thank you, Chair Easter, and committee members. I really appreciate the opportunity to speak to you this afternoon about part 3 of Bill C-44, on behalf of Canada's $80-billion restaurant industry.

This industry is a vital part of the country's economy. Canadians operate restaurants in every corner of Canada, from large metropolitan centres to remote communities. We are the fourth-largest private sector employer in Canada, with 1.2 million employees who interact with 18 million Canadians daily. A significant number of these jobs are derived from the sale of wine, beer, and beverage alcohol in licensed establishments. We are most proud to be the number-one, first-time creator of jobs in the country. We open the door of opportunity to youth, new Canadians, and those facing barriers to employment. Every dollar spent at a restaurant generates an additional $1.85 in spending in the rest of the economy—well above the average for all industries in Canada.

We indirectly employ more than 250,000 Canadians. More than two-thirds of Canada's restaurants are locally owned and operated by independent entrepreneurs. Our 95,000 restaurants, cafeterias, coffee shops, and bars are gathering spots for people from all walks of life to celebrate, to do business, to spend time with family and friends. Restaurants are also one of the top three reasons for tourists to make Canada their chosen destination.

However, you also need to know that we are an industry with razor-thin profit margins. The average restaurant in Canada takes home a mere 4.3% before taxes. According to Stats Canada, drinking places—that would be the bar and pub sector—have experienced sales declines in six out of the last eight years. Since 2000 the number of drinking places has plummeted by 40%. Beverage alcohol is an important input for restaurants and food service operators, who purchase approximately $3 billion of these products each year, but alcohol prices in Canada have reached the point of diminishing returns with stagnating sales to licensees.

What most Canadians don't know is that licensees often pay more for a case of beer, for a bottle of wine, or a bottle of spirits than consumers purchasing them at their provincial retail store. Once restaurants include the cost of service, glassware, overhead, rent, staffing—and staffing includes training on all service and responsible service of alcoholic beverages—it becomes very expensive for the average Canadian to enjoy a glass of wine, a pint of beer, or a cocktail with their meal.

You can't imagine the surprise of our members when government elected to add more taxes, not less, to alcohol, one of the highest tax commodities in the country, and to increase the tax in perpetuity. We've heard from small-town restaurant and pub operators who are struggling to keep their businesses afloat with rising labour, food, utility, and rent costs. The cumulative effect of the new excise duties will take another big chunk out of their businesses. These are real dollars that cannot be used for hiring staff, investments in innovation and refurbishing their businesses and, in some cases, remaining viable.

Last week we heard from Mr. Coulombe from the Department of Finance during his testimony to this committee. I know that restaurants were disheartened to hear that the department believed that the excise taxes would be so small that it wasn't necessary to analyze the economic impacts. A tax increase from $30 million to almost half a billion dollars in five years is not insignificant, particularly when you consider that the tax will be part of the base price to which all other fees, levies, markups, and provincial and federal taxes will be layered on. The cascading nature of provincial markups and PST, GST, or HST application will mean price increases of up to three times the amount of the federal excise tax for those who purchase alcohol.

This year's federal budget identifies agrifood as a potential growth sector, but a very broad swath of agrifood industries will be hurt by this compounding tax. The hospitality industry, together with the vintners, the brewers, the distillers, the grape and grain growers, and our related supply chain partners, is seeking this committee's support for the repeal of the annual excise duty escalator in Bill C-44 to ensure that all tax increases have oversight by parliamentarians, and that the economic impacts and considerations are factored in.

Thank you.

[Carl Sparkes, President and Chief Executive Officer, Devonian Coast Wineries]

Thank you, Chair Easter, and members of the committee.

Ladies and gentlemen, I'm here today representing my company, Devonian Coast Wineries, the largest winery in Atlantic Canada and the seventh-largest in Canada, as well as the Winery Association of Nova Scotia and its growers—in all, approximately 125 farm-based businesses. We appreciate the opportunity and invitation to share our perspective on Bill C-44.

The wine industry of Nova Scotia has been a shining light contributing to the revitalization of several rural communities in the province. The immensely positive contribution to the region is manifest across the agriculture, manufacturing, retail, and tourism sectors. Indeed, a recent study in 2016 revealed that the annual economic impact of the wine industry on the province has surpassed $216 million and is growing. That's massive for our region.

We are the newest but fastest-growing wine region in the country, attracting investment and excitement in parts of the province where agriculture and tourism had long been in decline.

With the level of upfront investment required and the long gestation period for vineyard, wine, and market development, many of our business models would be fragile if burdened with additional costs and regulation.

The decision to increase federal excise duty rates on beverage alcohol undermines the government's own objective of creating a business environment where manufacturers, particularly agrifood processors, can thrive and export abroad successfully.

The budget proposal to automatically adjust federal excise duties to CPI is a return to the failed policies of the past. Between 1981 and 1986, annual automatic adjustments to alcohol excise duties resulted in massive job losses and plant closures across this country.

We elect MPs to protect us and debate tax increases. This budget proposal takes their ability away and risks other taxes being implemented in a similar fashion.

The logic of attaching an annual increase to consumer price index is also fundamentally and particularly flawed, as this excise is an input tax and not a sales tax. This means that the real inflationary impact of applying the excise escalator on the raw material would translate into making our industry sectors' inflation rate approximately five times that of the national CPI every year going forward.

Domestically alone, this rampant indexed super-inflation would seriously damage our industry, as consumers would shift to lower-priced imports and away from Canadian-made wine. Canadian producers like our company would be faced with the choice of increasing prices to offset the input-cost increases or absorbing the increase in order to hold market share. Neither option is sustainable for any manufacturer, let alone one that deals with the inherent variability and uncertainty of agriculture. But that's far from the biggest threat to the Canadian wine industry.

International trading partner countries that have supported the 100% Canadian content exemption since 2006 are now giving notice that while the exemption is perfectly legal, if this escalator goes into legislation it, as well as other industry measures, would be challenged at the WTO level. Should the outcome be the likely reinstatement of the excise tax for 100% Canadian wine, almost immediately there would be operations shuttering, as the tax on the finished wine would be the equivalent of a 50% increase in the cost of our grapes. That is massive. Layoffs would be abundant throughout, planting would come to a halt, and the industry would end its tremendous growth trajectory.

In the case of my own companies' operations, I would likely lay off about 30% of our collective employees, terminate many grower contracts, and try to sell two of my three wineries—if there would be any buyer available under these conditions. In Atlantic Canada one of our few successful agricultural industries would be crippled. Having made a sizeable investment to enter into this industry five years ago, acquiring the largest winery in the region, we continue to invest every year and have doubled our volume in those five years.

We compete in our own backyard with global wine corporations whose governments do not tax them at home, but instead subsidize them to the hilt. At the same time our provincial monopolies' retail markups, along with the HST and excise, make us the highest domestic tax jurisdiction in the world. The only subsidy in our wine industry is coming from the owners themselves—owners like me.

The data supports the known fact that the Canadian wine industry punches well above its weight class in economic, cultural, and overall quality of life in Canada. Our growing presence abroad not only represents the best example of value-added agriculture, but it also enhances the perception of the entire Canadian brand. Our economic impact now tops $9 billion.

For our federal government to unwittingly place our industry at such risk is disturbing, to say the least; but to persist in legislating an annual indexation on our costs after learning of those risks would be unconscionable.

We ask that you repeal the indexation of the excise tax from the budget implementation act, 2017.

Thank you, Mr. Chair and committee members, for your time and attention today.

[Murray Souter, Board Member, Canadian Vintners Association]

Thank you, Mr. Chair and MPs.

I am grateful for the opportunity to appear here today and present the Canadian wine industry's perspective on Bill C-44, the budget implementation act.

My name is Murray Souter. I sit on the board of directors of the Canadian Vintners Association. I am also the president and CEO of Diamond Estates Wines & Spirits, located in Niagara-on-the-Lake, Ontario.

Diamond Estates is the home of a wide selection of top-selling VQA wines, including Lakeview Cellars, EastDell Estates, 20 Bees, FRESH, and the wines of Canadian acting legend Dan Aykroyd.

In the few minutes I have, I want to provide you with a snapshot of our national wine industry and Ontario's economic impact within it, as well as explain what the excise duty is and why the excise duty and the CPI should not be linked.

First, let me highlight some facts at the national level. The Canadian wine industry is made up of almost 700 wineries and 1,300 independent growers, contributing $9 billion to the national economy. We produce two types of products: premium 100% Canadian VQA wines, which contribute $4.5 billion in economic impact, and value-priced international Canadian blended wines made from imported and domestic content, which also contribute $4.5 billion.

In Ontario, specifically, the economic impact of the grape and wine industry equates to $4.4 billion, with Ontario being the largest wine grape-producing province in Canada. In 2015, it generated 18,000 jobs and over $750 million in federal-provincial taxes and liquor board markup. This is up from $600 million in 2011. For every dollar spent on Canadian wine in Ontario, almost $4 in GDP is generated across the province.

Budget 2017 is sending a mixed message to Canadians. On the one hand, it draws from the Prime Minister's Advisory Council on Economic Growth, which identifies Canada's value-added agrifood industry as an engine for growth, but at the same time it proposes a 2% increase in the excise duty on one of Canada's highest value-added products, wine.

The government is proposing in the budget bill to amend the Excise Act, to legislate the annual indexation of the wine excise duty to the consumer price index, effective April 1, 2018, meaning that the rate is set to increase every year.

Budget 2017 states that “[e]xcise duty rates on alcohol products have not effectively changed since the mid-1980s.” This, in fact, is not true. The last increase was in 2006, when the excise duty increased 21%, by 10.8¢ per litre, to 62¢ per litre.

Our industry is concerned that over the next five years, assuming a moderate, 2% inflation rate, the excise rate will increase by a cumulative 11%. Since the excise duty is a cost at the front of the price chain, the impact is cumulative, with ad valorem liquor board markup, GST, and PST adding to the consumer impact. The GST already picks up inflation on the producer price. By indexing excise, the price chain would pick up double inflation and multiply it through the price chain.

The impact on domestic wine pricing of adding the excise tax at a rate of 63¢ per litre is to add 90¢ to the retail price in an already price-sensitive, highly competitive market.

This legislated annual tax increase is also too rigid. It will tie the hands of future governments, and it fails to account for non-inflationary impacts facing the industry. It does not allow Parliament to do its job to ensure that all measures are considered for all future tax increases.

Wine is among the highest value-added agricultural products in Canada, yet many of our grape growers would face economic hardship due to this tax increase.

My company, Diamond Estates, is one of only two publicly traded wine companies in Canada. As such, we depend on the public markets in order to raise capital for expansion and growth. Just six months ago, our organization was able to conclude a significant capital raise to support our winery capacity expansion. This expansion was necessary to ensure continuity of supply for our fast-growing retail and export businesses.

However, today's capital markets have both well-informed and very savvy investors, and the contemplated changes in the excise tax regime are creating uncertainty and risk. That uncertainty is jeopardizing future capital raises necessary to support the planned doubling of our business over the next five years. More importantly, it jeopardizes the jobs that accompany that growth.

Imports represent 70% of wine sales in Canada, and with import tariffs soon to be eliminated under CETA, the proposed annual excise tax escalator would seriously damage our ability to compete.

With the recent challenge against Canada at the World Trade Organization, regarding the B.C. wine sold in grocery stores, and the renegotiation of NAFTA, it is clear that imports want more of our market and are willing to challenge us on all fronts.

Our industry is rooted in Canada, literally. We simply cannot uproot and take our business elsewhere. Wine is one of Canada's signature industries, which should be supported and promoted by our federal government, not selectively targeted.

Recommendation 54 in your committee's 11th report, entitled “Creating the Conditions for Economic Growth”, presented December 7, 2016, is as follows:

That the Government of Canada support innovation in the Canadian wine sector through improved operational and infrastructure investments.

The wine industry can be a strong contributor to the agrifood powerhouse that Canada is creating, which would strengthen our competitiveness domestically and abroad. However, this escalator will put economic growth on pause.

The Canadian wine industry can help the government to create more jobs, more wealth, and opportunities, but this starts with eliminating the excise escalator tax under budget 2017.

Thank you.

[Luke Harford, President, Beer Canada]

Thank you very much, Mr. Chair and members of the committee.

I really appreciate the opportunity to participate in the legislative process on behalf of the 45 Canadian beer companies I represent. My members are large and small domestic brewers from all 10 provinces and one territory.

My members have two concerns with budget 2017. First, it imposed an immediate 2% increase to excise duty rates on beer. The abruptness was very disruptive to normal business operations. The second and most serious concern is the escalator, the mechanism that will increase excise rates automatically every year with no requirement to check on the health of the domestic brewing industry. The immediate 2% increase is not helpful, but it doesn't compare to the damage the escalator will do to our domestic brewers.

I will use the few minutes I have to offer four reasons for removing the escalator from Bill C-44. First, tying the consumer price index to excise duty rates is too rigid and ignores regional economic differences. Second, the escalator bypasses Parliament's role in approving tax increases. Third, Finance Canada has acknowledged that it did not analyze the economic impact of the escalator or what effect it would have on our industry. Finally, there appears to be a large discrepancy in Canada's public accounts that would make it difficult for policy-makers to say anything about the effectiveness of excise duties.

The consumer price index reflects the cost of a fixed basket of commodities over time. It tells policy-makers nothing about what is going on in our sector or in a particular region of the country. I'm going to use Atlantic Canada to demonstrate why linking excise duty rates to the CPI is too rigid and insensitive to regional differences.

Over the last five years, the total volume of beer in Atlantic Canada declined by 3.3%, while the CPI, or consumer price index, increased by 5.5%. If the escalator had been in place, the government would have increased the tax on beer every year while Atlantic-based brewers struggled to adjust to lower demand. The escalator would have made a difficult situation in Atlantic Canada worse.

The escalator means annual tax increases on Canadians and Canadian businesses with no parliamentary oversight. The escalator will run in the background, resulting in higher beer taxes every year. Section 53 of the Constitution Act, at least in principle, should cause the government to pause on introducing a tax policy like the escalator. It requires that bills for imposing any tax originate in the House of Commons. Finance Canada advised this committee last week that it did not analyze the impact that higher excise duties would have on the domestic beverage alcohol industry. It likely did not consider the impact on the hospitality industry, either. It reasoned that the tax increase would be small on a per case or per bottle basis. The department has ignored the compounding tax-on-tax implications of the escalator and the fact that Canadians already pay the third highest beer taxes in the world.

There's a bigger point. The budget plan highlights that the government anticipates taking an additional $470 million in excise duties over the next five years because of the automatic increases. I can tell you with absolute confidence that there is no one in the domestic beverage alcohol industry that agrees with Finance Canada's forecast that the government can anticipate the status quo holding while it takes an additional half a billion dollars out of the productive use of the Canadian beverage alcohol producers.

The 2016 public accounts report that excise revenues from beer were $584 million for the fiscal year. This appears to be an under-representation of what actually is collected in excise on beer. It's like this every year. For fiscal 2016, Statistics Canada reported total beer sales for the country at 22.9 million hectolitres. With excise rates at $31.22 per hectolitre, the total revenues should be closer to $713 million, a $130 million gap from what is reported in the public accounts. Budget 2017 talks about excise rates not having increased since the mid 1980s, and it rationalizes the escalator as a way to maintain the effectiveness of excise duties.

There is no explanation of what constitutes effectiveness, but looking at the volumes of beer sold and the rates of excise in place from 1985 to 2016, the amount of excise remitted to the federal government has increased from $385 million to $713 million, an 85% hike. Over this time period, per capita consumption of beer declined from 103 litres to 76 litres, a 26% drop.

The domestic brewing community is counting on the honourable members of this committee to remove the escalator and demonstrate that by “effective” the government does not mean higher taxes at the expense of a healthy domestic brewing industry.

My plan for this afternoon was to provide the committee with four reasons for removing the escalator from budget 2017. I appreciate the opportunity to present these arguments on behalf of my 45 brewing members and, indeed, the broader brewing industry.

Thank you.

[The Chair, Liberal, Wayne Easter]

Order, please, members.

This is meeting number 90 of the committee. We're approaching 100. Will we get to 150?

Pursuant to the order of reference of Tuesday, May 9, 2017, our hearing today is about Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

We have five witnesses, including Mr. Luke Harford, president of Beer Canada; Mr. Murray Souter, board member, Canadian Vintners Association; Mr. Carl Sparkes, president and CEO of Devonian Coast Wineries; Ms. Joyce Reynolds, executive vice-president, government affairs, Restaurants Canada; and Mr. Jan Westcott, president and CEO of Spirits Canada.

I know that a couple of people went out of their way to change their travel arrangements.

I believe one person was supposed to be in Spain, so we appreciate that effort, Mr. Sparkes, to get here to give your information to the committee.

Try to hold your comments to about five minutes. Then we'll go to questions.

We will start with Mr. Harford.

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

Thank you, Mr. Chair.

I would like to thank the witnesses for being here today.

You said that most of the clauses would come into force only 36 months after the act received royal assent, because you want to consult and, most importantly, to inform the individuals affected, meaning employers and employees.

My question is more about what was done before the changes were proposed in Bill C-44 in the way of consultations not only with employers in the federal jurisdiction, but also with employees and unions. These are relatively major changes, which will have huge repercussions.

How many consultations were there before these changes were proposed? How long has it been in the works? You certainly didn't start working on it yesterday.

[Eric Advokaat, Senior Director, Occupational Health and Safety, Workplace Directorate, Labour Program, Department of Employment and Social Development]

Thank you very much, honourable members.

My name is Eric Advokaat. I'm the senior director of the occupational health and safety division for the labour program within Employment and Social Development Canada. I'm here with my colleague Charles Philippe Rochon, a senior analyst.

My area of expertise is really in part II of the Canada Labour Code, which is the occupational health and safety aspect of it. Charles Philippe will be able to address some of the detailed proposed changes in part III, which is really the labour standards portion of the Canada Labour Code.

Division 17 of part 4, as has been noted by the chair, is a large portion of the budget implementation act.

Number one, it proposes to amend the Canada Labour Code to update the suite of compliance and enforcement tools aimed at deterring non-compliance with occupational health and safety and labour standards requirements. This is to ensure that workers in federally regulated industries suffer fewer accidents and injuries at work, and that they receive the pay and benefits to which they are entitled. It will also consolidate the various adjudicative functions that exist under the code, under the Canada Industrial Relations Board.

There are three key changes that I'm going to speak to before I turn it over to Charles Philippe. These changes will apply both to part II, which, again, is the occupational health and safety aspect of the code, and to part III, the labour standards standards parts of the code.

These three amendments are to establish, under a new proposed part IV of the code, a system of administrative monetary penalties to promote compliance with occupational health and safety and labour standards requirements. This would include giving the Governor in Council regulation-making powers to designate violations and determine the associated penalties, up to a maximum of $250,000 per individual violation, and also setting out processes for the issuance review and appeal of notices of violation.

The second aspect is to provide authority to publish information about employers who have been found guilty of an offence or who have violated occupational health and safety or labour standards requirements. The type of information that could be published would also be spelled out in regulation after consultations with stakeholders, but could include, for instance, the employer's name, the nature of the violation or offence, and the associated penalties. Information would be published only once all review and appeal processes have been exhausted.

The third aspect of the change is to, as I've said, consolidate under the Canada Industrial Relations Board the functions of appeals officers under part II and of wage referees and unjust dismissal adjudicators under part III of the code, as well as the functions of adjudicators under the Wage Earner Protection Program Act. This entails some changes as well to part I of the code, which speaks to industrial relations, and would be necessary to adjust the board's powers, duties, and functions. We believe this measure would streamline the appeals process, better use existing expertise, enhance consistency of decisions, and promote a timely resolution of issues.

Those are the three bigger changes that apply to all aspects of the Canada Labour Code, and then there are several others that Charles Philippe is going to speak to that are proposed for part III of the code.

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

Thank you, Mr. Chair.

Thank you, Mr. Minister, for being here.

I would like to continue with the Canada Infrastructure Bank, which has been the focus of much discussion since you introduced Bill C-44 and even before that, obviously, since it was already in your department's sights.

An advisory council produced a report on economic growth and advised you. You subsequently almost copied and pasted it into Bill C-44.

Of the people who participated in the report, several—one in particular—mentioned that the objective of these infrastructure projects was to provide a return of 7% to 9%.

Can you confirm that the objective of the Canada Infrastructure Bank is to give investors a return of 7% to 9%? Can you confirm these percentages, which were put forward by people with special interests in the bank?

[Bill Morneau, Liberal, Minister of Finance]

Thank you very much, Chair and honourable colleagues.

I am very pleased to talk to you today about Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

The passage of this bill paves the way for the next stage of the government's plan to strengthen and grow the middle class and all those working hard to join it. It will allow the government to continue making the smart investments that will create jobs, grow our economy, and provide more opportunities for the middle class.

The steps we have taken to date are having a real and positive impact on our economy and on Canadians. Over the past year, the economy created over a quarter of a million new jobs, the large majority of which were in full-time positions and in the private sector. Forecasters are expecting Canada's economy to grow even faster over the next two years.

We understand that, despite these positive signs, people are still anxious about the future. Canadians want to be assured that their hard work will mean a better future for their children and their grandchildren.

We must show through action that their concerns are real and that we are ready to take the necessary steps to help them succeed. That's why we are here today, to study and discuss important measures in Bill C-44 and to come to a consensus about the issues that matter most, which is what Canadians expect.

Though I know that the members of this committee are very knowledgeable on the contents of this bill, I want to begin by highlighting a few measures that I know are top of mind for the committee.

First, we have taken steps to strengthen the parliamentary budget office to make it truly independent. Bill C-44 recasts the head of the PBO as an officer of Parliament, with the authority to report directly to Parliament and supported by a team that is separate from the Library of Parliament. Our plan will ensure that the PBO will have expanded right of access to government information and a new mandate to provide costing of platform proposals during elections.

Honourable members, we need to get this right.

The parliamentary budget officer's work is essential to Parliament's capacity to discuss and study current economic and financial issues. This work helps us by requiring us to meet higher standards and to enable us to focus on the facts.

I am here today to take your questions. I know that some of you have expressed concerns. We are open to your views; in fact, we depend on them.

I want to turn now to one of the best ways we can bring confidence back to the middle class: investing in public infrastructure to build stronger communities. Our government has laid out a historic plan to invest more than $180 billion in infrastructure over the next 12 years, but no order of government can accomplish ambitious goals for infrastructure alone. Investors have told us that they want to invest in Canada.

As you are well aware, our country has enormous infrastructure needs and infinite potential for the creation of world-class facilities. For this reason, Bill C-44, enacts the Act to establish the Canada Infrastructure Bank, which establishes the new Canada Infrastructure Bank as a Crown corporation.

Through this new bank, we will work with our partners to build world-class infrastructure that will transform communities, create good jobs, build a stronger and greener economy, and ensure that more of the infrastructure needed by Canadians gets built. Canadians today will benefit from good, well-paying jobs, and Canadians tomorrow will enjoy the advantages of good roads, bridges, transit, and social infrastructure built to meet their needs and help their communities thrive.

Looking beyond bricks and mortar, we really put people at the heart of our plan. I want to address a few measures of this bill that speak directly to our highest priority—the middle class and all those working hard to join it.

The government is firmly committed to helping Canadians of all ages to get the training and the skills they need to succeed in the current and future economic conditions. That is why, throughout the pages of this bill, you will find measures designed to help Canadians receive training, no matter what stage of life they are in.

We want to help Canadians to get the training they need so that their first job is a great job, and their next job is a better job. That's why we're taking steps to help working parents who must balance the demands of raising a family while managing their own career needs in this time of transition.

Bill C-44 would allow parents to choose to receive EI parental benefits over an extended period of up to 18 months at a lower benefit rate of 33% of average weekly earnings. It also proposes to do more to provide greater flexibility to pregnant working women, giving them the option of claiming EI maternity benefits up to 12 weeks before their due date, expanded from the current standard of eight weeks, if they so choose.

Budget 2017 also takes action to support those who have put their lives on the line to make Canada a safe and secure place to live. After putting themselves in harm's way in service to our country, our women and men in uniform deserve a successful transition to civilian life. To help, we'll create a new education and training benefit. This benefit will provide more money for veterans to go to college, university, or a technical school after they complete their service.

I want to stress that we understand the job is not yet complete. Veterans and stakeholders have told us that the existing suite of programs is complex, and difficult and stressful to navigate, and that simply isn't good enough. Over the coming months we intend to take additional action to streamline and simplify the system of financial support programs currently offered to veterans. That will include fulfilling our commitment to re-establish lifelong pensions as an option for injured veterans so that veterans and their families can decide for themselves which form of compensation works best.

To conclude, the bill before us has concrete measures that move Canada forward as a smart and caring nation, but we can and will do more.

We continue to focus on growth, but we will not do so to the detriment of other key issues. We will ensure that all Canadians benefit from growth, not just the wealthiest, and we will help families see the futures of their children and grandchildren with more optimism.

I urge the members of this committee to support the bill and to work with us on those portions of it that can benefit from your own views and ideas so that at the end of the day we meet the high standards and expectations that Canadians have of us.

Before I conclude, I'd like to give you a preview of some of the issues we're looking to address over the coming months. Our government believes that every Canadian needs to pay their fair share of taxes, and in the coming weeks and months I'll be laying out our plan to ensure greater tax fairness. Billed-basis accounting, for example, will be brought forward as part of the next budget implementation act, which will provide the opportunity for the committee to consider in detail the legislative proposals for this measure. I know this is a topic that spurred much discussion, and I look forward to hearing your thoughts.

We're also examining tax planning strategies involving the use of private corporations. As announced in budget 2017, we will release a paper setting out the issues of this in detail, as well as proposed policy responses.

While I'm on the subject of taxation, I know members will have questions about our plans to tax the future legal sale of cannabis. Work has begun on the design of this taxation regime, and the issue will be on the agenda at the next meeting of provincial and territorial finance ministers in June. The goal will be to agree on some basic principles with the intent to move quickly on these historic legislative proposals.

Again, thank you for giving me the opportunity to speak to you today, and I'm happy to take your questions.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Pursuant to the order of reference of Tuesday, May 9, we are studying Bill C-44, an act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

We are fortunate to have Minister Bill Morneau here this morning. With him as witnesses from the Department of Finance are Paul Rochon, deputy minister, and Andrew Marsland, senior assistant deputy minister, tax policy branch. Welcome, gentlemen.

Just for the committee's information, we know that there is likely going to be a call for votes. There will be a 30-minute bell, and we will stay until there are about seven minutes left on that bell. The minister has agreed to come back, following the vote, to give us a full hour of his commitment to the committee.

With that, Minister, the floor is yours.

Proposed Canada Infrastructure Bank

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I am rising to respond to the question of privilege raised by the member for Victoria on Wednesday, May 10, respecting the selection process for the prospective positions at the proposed Canada infrastructure bank.

The member alleges that the government's posting of a selection process for the prospective positions of chairperson, directors, president and CEO of the Canada infrastructure bank constitutes a contempt of the House since the bill to create the organization has not received royal assent. The member is correct in his assertion that the establishment of the bank and the ability to hire staff, provide remuneration, and to cover expenses are authorized by royal recommendation that is attached to those provisions, but the spending for those purposes can only occur once the bill has been promulgated by Parliament.

Where the member's argument falls short is in his assumption that the government is seeking to establish the bank and hire staff in advance of royal assent for Bill C-44. The government is not authorized to spend for those purposes until the bill has been duly promulgated. That, however, does not prevent the government from undertaking planning for the potential establishment of the bank. That is precisely what the government is doing.

I would draw to the attention of members that the news release posted on Infrastructure Canada's website, entitled “Government of Canada launches Leadership Search for the Canada Infrastructure Bank”, states:

Subject to Parliamentary approval, the Bank would operate at arms-length from the government as a Crown corporation and would work with provincial, territorial, municipal, Indigenous, and private sector investment partners to attract pension funds and other institutional investors to new revenue-generating infrastructure projects that are in the public interest.

No member has been impeded in the discharge of his or her duties in the consideration of Bill C-44 and, in particular, the provisions relating to the establishment of the bank. The finance committee is considering the bill, and once it is reported back, it will enjoy further debate in the House and in the Senate. To suggest that the government is not able to undertake planning processes for anticipatory or proposed initiatives cannot be taken seriously. The government has been clear that it cannot authorize spending for the purposes set out in division 18 of part 4 without parliamentary approval.

[The Chair, Liberal, Wayne Easter]

All you can do is put it on the record in the House of Commons.

Thank you, gentlemen, for appearing before us on part 4, division 7.

For the information of the committee before we adjourn, we did farm out some divisions of Bill C-44 to other committees. We have had responses back from them now.

To the citizenship and immigration committee, we farmed out division 13, and to human resources, division 14. They will not study those sections of the bill. The clerk will distribute the letters from the chairs of those two committees to members shortly.

On division 12, we farmed that out to veterans affairs; division 18, to transport; and division 4 to government operations and estimates. Those chairs have indicated they will study those sections and report back to the committee.

This means there will be three divisions that other committees will look at and report back to us.

Mr. Liepert.

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

No, I'm asking a question. With the bill we have before us, Bill C-44, are PBO costing requests more limited than they are now?