Bill C-74 (Historical)

Budget Implementation Act, 2018, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures

Part 1 implements certain income tax measures proposed or referenced in the February 27,2018 budget by
(a) ensuring appropriate tax treatment of amounts received under the Veterans Well-being Act;
(b) exempting from income amounts received under the Memorial Grant for First Responders;
(c) lowering the small business tax rate and making consequential adjustments to the dividend gross-up factor and dividend tax credit;
(d) reducing the business limit for the small business deduction based on passive income and restricting access to dividend refunds on the payment of eligible dividends;
(e) preventing the avoidance of tax through income sprinkling arrangements;
(f) removing the risk score requirement and increasing the level of income that can be deducted for Canadian armed forces personnel and police officers serving on designated international missions;
(g) introducing the Canada Workers Benefit;
(h) expanding the medical expense tax credit to recognize expenses incurred in respect of an animal specially trained to perform tasks for a patient with a severe mental impairment;
(i) indexing the Canada Child Benefit as of July 2018;
(j) extending, for one year, the mineral exploration tax credit for flow-through share investors;
(k) extending, by five years, the ability of a qualifying family member to be the plan holder of an individual’s Registered Disability Savings Plan;
(l) allowing transfers of property from charities to municipalities to be considered as qualifying expenditures for the purposes of reducing revocation tax;
(m) ensuring that appropriate taxpayers are eligible for the Canada Child Benefit and that information related to the Canada Child Benefit can be shared with provinces and territories for certain purposes; and
(n) extending, by five years, eligibility for Class 43.‍2.
Part 2 implements certain excise measures proposed in the February 27,2018 budget by
(a) advancing the existing inflationary adjustments for excise duty rates on tobacco products to occur on an annual basis rather than every five years; and
(b) increasing excise duty rates on tobacco products to account for inflation since the last inflationary adjustment in 2014 and by an additional $1 per carton of 200 cigarettes, along with corresponding increases to the excise duty rates on other tobacco products.
Part 3 implements a new federal excise duty framework for cannabis products proposed in the February 27,2018 budget by
(a) requiring that cannabis cultivators and manufacturers obtain a cannabis licence from the Canada Revenue Agency;
(b) requiring that all cannabis products that are removed from the premises of a cannabis licensee to be entered into the Canadian market for retail sale be affixed with an excise stamp;
(c) imposing excise duties on cannabis products to be paid by cannabis licensees;
(d) providing for administration and enforcement rules related to the excise duty framework;
(e) providing the Governor in Council with authority to provide for an additional excise duty in respect of provinces and territories that enter into a coordinated cannabis taxation agreement with Canada; and
(f) making related amendments to other legislative texts, including ensuring that any sales of cannabis products that would otherwise be considered as basic groceries are subject to the GST/HST in the same way as sales of other types of cannabis products.
Part 4 amends the Pension Act to authorize the Minister of Veterans Affairs to waive, in certain cases, the requirement for an application for an award under that Act.
It also amends the Veterans Well-being Act to, among other things,
(a) replace the earnings loss benefit, career impact allowance, supplementary retirement benefit and retirement income security benefit with the income replacement benefit;
(b) replace the disability award with pain and suffering compensation; and
(c) create additional pain and suffering compensation.
Finally, it makes consequential amendments to other Acts.
Part 5 enacts the Greenhouse Gas Pollution Pricing Act and makes the Fuel Charge Regulations.
Part 1 of that Act sets out the regime for a charge on fossil fuels. The fuel charge regime provides that a charge applies, at rates set out in Schedule 2 to that Act, to fuels that are produced, delivered or used in a listed province, brought into a listed province from another place in Canada, or imported into Canada at a location in a listed province. The fuel charge regime also provides relief from the fuel charge, through rebate and exemption certificate mechanisms, in certain circumstances. The fuel charge regime also sets out the registration requirements for persons that carry out certain activities relating to fuels subject to the charge. Part 1 of that Act also contains administrative provisions and enforcement provisions, including penalties, offences and collection provisions. Part 1 of that Act also sets out a mechanism for distributing revenues from the fuel charge. Part 1 of that Act also provides the Governor in Council with authority to make regulations for purposes of that Part, including the authority to determine which province, territory or area is a listed province for purpose of that Part.
Part 2 of that Act sets out the regime for pricing industrial greenhouse gas emissions. The industrial emissions pricing regime requires the registration of any facility that is located in a province or area that is set out in Part 2 of Schedule 1 to that Act and that either meets criteria specified by regulation or voluntarily joins the regime. The industrial emissions pricing regime requires compliance reporting with respect to any facility that is covered by the regime and the provision of compensation for any amount of a greenhouse gas that the facility emits above the applicable emissions limit during a compliance period. Part 2 of that Act also sets out an information gathering regime, administrative powers, duties and functions, enforcement tools, offences and related penalties, and a mechanism for distributing revenues from the industrial emissions pricing regime. Part 2 of that Act also provides the Governor in Council with the authority to make regulations for the purposes of that Part and the authority to make orders that amend Part 2 of Schedule 1 by adding, deleting or amending the name of a province or the description of an area.
Part 3 of that Act authorizes the Governor in Council to make regulations that provide for the application of provincial laws concerning greenhouse gas emissions to works, undertakings, lands and waters under federal jurisdiction.
Part 4 of that Act requires the Minister of the Environment to prepare an annual report on the administration of the Act and to cause it to be tabled in each House of Parliament.
Part 6 amends several Acts in order to implement various measures.
Division 1 of Part 6 amends the Financial Administration Act to establish the office of the Chief Information Officer of Canada and to provide that the President of the Treasury Board is responsible for the coordination of that Officer’s activities with those of the other deputy heads of the Treasury Board Secretariat. It also amends the Act to ensure Crown corporations with no borrowing authority are able to continue to enter into leases and to specify that leases are not considered to be transactions to borrow money for the purposes of Crown corporations’ statutory borrowing limits.
Division 2 of Part 6 amends the Canada Deposit Insurance Corporation Act in order to modernize and enhance the Canadian deposit insurance framework to ensure it continues to meet its objectives, including financial stability.
Division 3 of Part 6 amends the Federal-Provincial Fiscal Arrangements Act to renew Fiscal Equalization Payments to the provinces and Territorial Formula Financing Payments to the territories for a five-year period beginning on April 1,2019 and ending on March 31,2024, and to authorize annual transition payments of $1,270,000 to Yukon and $1,744,000 to the Northwest Territories for that period. It also amends the Act to allow Canada Health Transfer deductions to be reimbursed when provinces and territories have taken the steps necessary to eliminate extra-billing and user fees in the delivery of public health care.
Division 4 of Part 6 amends the Bank of Canada Act to ensure that the Bank of Canada may continue to buy and sell securities issued or guaranteed by the government of the United Kingdom if that country ceases to be a member state of the European Union.
Division 5 of Part 6 amends the Currency Act to expand the objectives of the Exchange Fund Account to include providing a source of liquidity for the government of Canada. It also amends that Act to authorize the payment of funds from the Exchange Fund Account into the Consolidated Revenue Fund.
Division 6 of Part 6 amends the Bank of Canada Act to require the Bank of Canada to make adequate arrangements for the removal from circulation in Canada of its bank notes that are worn or mutilated or that are the subject of an order made under paragraph 9(1)‍(b) of the Currency Act. It also amends the Currency Act to provide, among other things, that
(a) bank notes are current if they are issued under the authority of the Bank of Canada Act;
(b) the Governor in Council may, by order, call in certain bank notes; and
(c) bank notes that are called in by order are not current.
Division 7 of Part 6 amends the Payment Clearing and Settlement Act in order to implement a framework for resolution of clearing and settlement systems and clearing houses, and to protect information related to oversight, by the Bank of Canada, of clearing and settlement systems.
Division 8 of Part 6 amends the Canadian International Trade Tribunal Act to, among other things,
(a) create the position of Vice-chairperson of the Canadian International Trade Tribunal;
(b) provide that former permanent members of the Tribunal may be re-appointed to one further term as a permanent member; and
(c) clarify the rules concerning the interim replacement of the Chairperson of the Tribunal and provide for the interim replacement of the Vice-chairperson of the Tribunal.
Division 9 of Part 6 amends the Canadian High Arctic Research Station Act to, among other things, provide that the Canadian High Arctic Research Station is to be considered an agent corporation for the purpose of the transfer of the administration of federal real property and federal immovables under the Federal Real Property and Federal Immovables Act. It also provides that the Order entitled Game Declared in Danger of Becoming Extinct is deemed to have continued in force and to have continued to apply in Nunavut, as of April 1,2014.
Division 10 of Part 6 amends the Canadian Institutes of Health Research Act in order to separate the roles of President of the Canadian Institutes of Health Research and Chairperson of the Governing Council, to merge the responsibility to establish policies and to limit delegation of certain Governing Council powers, duties and functions to its members or committees or to the President.
Division 11 of Part 6 amends the Red Tape Reduction Act to permit an administrative burden imposed by regulations to be offset by the reduction of another administrative burden imposed by another jurisdiction if the reduction is the result of regulatory cooperation agreements.
Division 12 of Part 6 provides for the transfer of certain employees and disclosure of information to the Communications Security Establishment to improve cyber security.
Division 13 of Part 6 amends the Department of Employment and Social Development Act to provide the Minister of Employment and Social Development with legislative authority respecting service delivery to the public and to make related amendments to Parts 4 and 6 of that Act.
Division 14 of Part 6 amends the Employment Insurance Act to modify the treatment of earnings received by claimants while they are in receipt of benefits.
Division 15 of Part 6 amends the Judges Act to authorize the salaries for the following new judges, namely, six judges for the Ontario Superior Court of Justice, one judge for the Saskatchewan Court of Appeal, 39 judges for the unified family courts (as of April 1,2019), one judge for the Federal Court and a new Associate Chief Justice for the Federal Court. This division also makes consequential amendments to the Federal Courts Act.
Division 16 of Part 6 amends certain Acts governing federal financial institutions and related Acts to, among other things,
(a) extend the scope of activities related to financial services in which federal financial institutions may engage, including activities related to financial technology, as well as modernize certain provisions applicable to information processing and information technology activities;
(b) permit life companies, fraternal benefit societies and insurance holding companies to make long-term investments in permitted infrastructure entities to obtain predictable returns under the Insurance Companies Act;
(c) provide prudentially regulated deposit-taking institutions, such as credit unions, with the ability to use generic bank terms under the Bank Act, subject to disclosure requirements, as well as provide the Superintendent of Financial Institutions with additional enforcement tools under the Bank Act and the Office of the Superintendent of Financial Institutions Act, and clarify existing provisions of the Bank Act; and
(d) modify sunset provisions in certain Acts governing federal financial institutions to extend by five years, after the day on which this Act receives royal assent, the period during which those institutions may carry on business.
Division 17 of Part 6 amends the Western Economic Diversification Act to remove the requirement of the Governor in Council’s approval for the Minister of Western Economic Diversification to enter into an agreement with the government of a province, or with a provincial agency, respecting the exercise of the Minister’s powers and the carrying out of the Minister’s duties and functions.
Division 18 of Part 6 amends the Parliament of Canada Act to give each House of Parliament the power to make regulations related to maternity and parental arrangements for its own members.
Division 19 of Part 6 amends the Canada Pension Plan to, among other things,
(a) eliminate age-based restrictions on the survivor’s pension;
(b) fix the amount of the death benefit at $2,500;
(c) provide a benefit to disabled retirement pension beneficiaries under the age of 65;
(d) protect retirement and survivor’s pension amounts under the additional Canada Pension Plan for individuals who are disabled;
(e) protect benefit amounts under the additional Canada Pension Plan for parents with lower earnings during child-rearing years;
(f) maintain portability between the Canada Pension Plan and the Act respecting the Québec Pension Plan; and
(g) authorize the making of regulations to support the sustainability of the additional Canada Pension Plan.
Division 20 of Part 6 amends the Criminal Code to establish a remediation agreement regime. Under this regime, the prosecutor may negotiate a remediation agreement with an organization that is alleged to have committed an offence of an economic character referred to in the schedule to Part XXII.‍1 of that Act and the proceedings related to that offence are stayed if the organization complies with the terms of the agreement.

[Luke Harford, President, Beer Canada]

Thank you, Mr. Chairman, and members of the committee, for the opportunity to appear here today.

My name is Luke Harford. I am the President of Beer Canada, the national voice for beer. I appreciate being able to come here to explain the beer industry's concerns about part 3 of Bill C-74.

Beer Canada has 50-plus Canadian beer companies as members. Some are large. Some are medium in size. Many are small. Together, they account for 90% of the beer manufactured in Canada and cover all 10 provinces and one territory.

Part 3 of Bill C-74, the budget implementation act, proposes to amend the Excise Act of 2001 to introduce an excise duty framework on cannabis products. The federal government has structured the excise duty framework on cannabis to coordinate with the provinces and keep taxes on cannabis products low. The government aims to keep the tax on cannabis low to keep prices low and encourage sales through legal market channels.

Bill C-74 proposes a flat 25¢ excise duty per gram of cannabis product as the federal portion, with plans to later introduce a 75¢ per gram portion that will go to the province or territory.

Beer Canada views this tax proposal as low, in the context of current taxation policy and given the evidence in the United States. Evidence from the U.S. indicates that the price of cannabis will fall as larger volume cannabis producers come on stream and get up to capacity, while industry analysis of the recreational market in Canada also shows that cannabis prices will drop by half with legalization.

In Colorado, recreational marijuana excise tax revenues have grown by 540% since 2014, with the state having increased its marijuana sales tax from 10% to 15% in July 2017. In Washington state, where recreational marijuana is subject to a 37% state excise tax, sales grew by over $1 billion in the last two years, with state excise revenues increasing from $65 million in 2015 to $314 million in 2017.

Canadian marijuana taxation levels should not be driven solely by an exaggerated concern about pricing too it high to cannibalize the illegal marijuana market. Convenience, product knowledge, quality assurance, and personal safety will drive sales through the legal channel, even at higher tax loads.

What is especially noteworthy for us about the U.S. experience is that their marijuana taxes are much higher than their beer taxes. Colorado, Washington, and Oregon have all implemented marijuana tax rates that are double and triple the rates they apply to beer.

In Canada, the potential for legal marijuana to cannibalize beer is much more significant compared to the U.S. because of our higher beer taxes and higher prices. The tax on a case of beer in Canada is five times higher than it is in the U.S.. Marijuana taxation rates need to be informed by basic principles of fairness and potential economic impacts, in addition to black market activity.

Since 2010, there have been 45 tax increases on beer in Canada. The taxes on a case of beer now make up, on average, 47% of the price a Canadian pays for a case of beer. Last year, the federal government increased the excise duty on beer by 2%. It was increased by another 1.5% this past April, and it's set to increase every year because of the federal government's new automatic beer escalator tax.

Canadians are upset over high beer taxes. Fifty thousand Canadians have signed on to our Axe the Beer Tax campaign. They have demonstrated a desire to be engaged in the issue. The frustration with high beer taxes also came through in sentiments Canadians expressed on social media over the recent April 19 Supreme Court ruling in the Comeau case.

Domestic brewers are concerned about legal recreational marijuana. It is going to have a negative impact on beer sales, which have already declined by 10% in the last 10 years on a per capita basis.

The implication is clear. Low cannabis taxes will increase cannabis sales, while high beer taxes will decrease beer sales, leaving the government with less revenue, on balance. We are left asking ourselves, is it worth investing in the Canadian brewing industry today?

In the United States, not only are taxes on cannabis higher than beer taxes, but the U.S. government recently rolled back federal excise taxes on beer to help American brewers grow and compete. The 2017 U.S. Tax Cuts and Jobs Act lowers beer taxes, while Canada is moving in the exact opposite direction. From the beginning of 2017 to the end of 2019, Canada will add $63 million in higher excise duty costs on beer while the U.S. lowers its federal excise burden by $280 million. At the beginning of 2017, a brewer producing one million hectolitres of beer in Canada paid an excise duty rate 60% higher than an American brewer with the same production volume. By April 2019, the difference will be 93% at today's exchange rates.

Canadians know that they pay more for beer compared to their neighbours to the south. They know that because they visit the U.S. and come back talking about how expensive beer is here. Beer Canada aims to explain that this is because Canadians pay $20 in tax for a case of beer, on average, while Americans pay just $4 in tax, and to explain how the federal and provincial governments are layering one beer tax on top of another, hoping that Canadians don't notice.

Beer Canada believes that the low-tax approach to cannabis proposed in Bill C-74 is unreasonable in the context of the higher beer taxes paid by Canadian consumers. It is not fair to Canadian beer drinkers. It is not reasonable for the government to set marijuana taxation at such a low level while increasing one of the world's highest beer tax rates year after year.

Beer Canada urges the finance committee to consider the implication of low marijuana taxes on beer sales and government revenues. Higher taxes on beer are not going to help domestic brewers invest in their facilities and their people, or reverse declining beer sales. Canada needs a more balanced approach to tax policy that is fair for beer drinkers and brewers alike. We request that future increases to the federal beer excise tax be eliminated and that the government consider a higher tax rate for marijuana products that is more consistent with its approach to competitive products.

Thank you, Mr. Chairman.

[The Chair, Liberal, Wayne Easter]

I will call the meeting to order.

As everyone knows by now, per the order of reference of Monday, April 23, we are dealing with Bill C-74, the budget implementation bill for the February 27 budget of this year.

We have quite a number of witnesses this afternoon. We're starting a little late and have a hard stop tonight at 5:30. Sometimes we can go a little beyond the time, but we can't tonight. We will ask the witnesses to try to hold their remarks to five minutes, and we'll shorten the question times for members as well so we can get as much done as possible.

We'll start with Ms. Annie MacEachern, as an individual, a colleague of mine from Prince Edward Island. Welcome, Annie.

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

Was this measure included in Bill C-74 because of specific cases? Without going into details, there has been a case in Sherbrooke that you may be familiar with. Are they specific cases? If yes, how many cases led you to propose such an amendment?

[Grahame Johnson, Managing Director, Funds Management and Banking Department, Bank of Canada]

Thank you, Mr. Chairman.

Thank you for the invitation to discuss the proposed legislative changes in Bill C-74 to the Bank of Canada Act.

Under section 18(d) of the act, the Bank of Canada has the authority to buy or sell securities issued or guaranteed by the government of the country in the European Union. The Bank of Canada is proposing amendments to the act in anticipation of the United Kingdom's exit from the European Union. These amendments would ensure that the Bank of Canada can continue to buy and sell securities that are issued or guaranteed by the United Kingdom.

That's really it. I'd be happy to take questions if there are any. It's a technical amendment reflecting the Brexit vote.

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

Thank you.

I'm going to put a brief question to Mr. Braid. I am happy to see you here again as a witness.

Something in Bill C-74 concerned me when I read it. It says:

permit life companies, fraternal benefit societies and insurance holding companies to make long-term investments in permitted infrastructure entities to obtain predictable returns under the Insurance Companies Act

I was wondering if you had anything to say on this particular clause of the bill.

[Peter Braid]

As many of you will know, IBAC is the national voice of property and casualty insurance brokers, advocating for the interests of both insurance brokers and consumers to the Government of Canada.

Brokers have a long history of providing customer service, non-biased insurance advice, while consistently demonstrating their strong commitment to consumer protection. Operating small businesses in virtually every city and town across Canada, brokers create employment and support the local economy. They are also community leaders who make a difference in their respective communities.

Let me begin by saying that IBAC welcomes the continuation of consumer protections in the budget bill. As members of the committee will know, Bill C-74 includes proposed amendments to the Bank Act that give greater flexibility for financial institutions to undertake fintech activities. IBAC is pleased that these changes specifically maintain the banks' existing restrictions on business powers, meaning that banks cannot carry on the business of insurance at the point of granting credit. As the government develops regulations for fintech it will be important to ensure that the historical separation between banking and insurance is preserved.

We must ensure that banks are not allowed to do through the back door what they are prohibited from doing through the front door with regard to retailing or making referrals in the insurance marketplace. We believe this will be accomplished by making it clear in the regulations that new fintech entities are subject to the same restrictions as banks. For the record, IBAC supports measures to modernize the federal financial sector framework through technology and innovation. Being from Waterloo, I know how important that is for the economy.

At the same time, the principle of protecting consumers is paramount for insurance brokers. That is why insurance ought not to be sold to consumers at the point of granting credit. This fundamental position has been upheld by successive governments with all-party support, and further expanded to include the online environment.

Bill C-74 explicitly states that new provisions in the area of fintech will continue to be subject to the banks' traditional restrictions on business powers and insurance. As you continue your deliberations it is critically important that these consumer protections are maintained. They serve the best interests of your constituents.

I would also like to take this opportunity to note that this committee has studied the issue of bank practices brought to light by the media, involving questionable sales activities. I followed these hearings closely and commend the committee for this important work. Your study noted the ever-expanding role banks play in consumers' lives, and underscored the important need to protect financial consumers and ensure they are not taken advantage of.

As you know, Canada's financial system is the envy of the world. The fact that our banks and insurance companies remained so solid during the financial crisis in 2008 demonstrates the importance of well-regulated and separated business powers. Now as financial sector players continue to innovate and bring new products to consumers, it will become more important than ever to ensure that our regulations continue to be effectively applied and enforced.

We look forward to this bill's eventual passage into law, and to continuing to work with the government to create a consumer-focused regulatory regime.

Thank you very much.

[Peter Braid, Chief Executive Officer, Insurance Brokers Association of Canada]

Thank you very much, Mr. Chair.

Good afternoon, honourable members. I'm very pleased to be here today on behalf of the Insurance Brokers Association of Canada, or IBAC, to contribute to the public discussion on Bill C-74.

As a former member of the House of Commons, I appreciate the opportunity to attend committee from the new perspective this side of the table provides. I recall as well that only the best and the brightest from the House of Commons serve on the finance committee, and I note that I was never a member of this committee.

[Amanda Wilson, National Director, Canadian Health Coalition]

Good afternoon, and thank you for inviting the Canadian Health Coalition to speak today.

Founded in 1979, the Canadian Health Coalition is a public advocacy organization dedicated to the preservation and improvement of public health care. Our membership is comprised of national organizations representing health care workers, seniors, churches, anti-poverty groups, trade unions, as well as affiliated coalitions in 10 provinces and one territory.

We would like to share our perspective specifically on part 6 of Bill C-74, which proposes amendments “to allow Canada Health Transfer deductions to be reimbursed when provinces and territories have taken the steps necessary to eliminate extra-billing and user fees in the delivery of public health care.”

The Canadian Health Coalition welcomes this amendment, but we also believe it is imperative that this action be taken alongside other activities to curb the increasing threat of private, for-profit health care in Canada.

At a time when private clinics and user fees are springing up across the country, the federal government needs to make use of all the tools at its disposal to protect the ethos of equitable care for all. This includes withholding health transfer payments to provinces and territories who fail to uphold the core principles of the Canada Health Act that health care should be publicly administered, comprehensive, universal, portable, and accessible. In addition to violating these fundamental principles, unlawful extra billing comes at the expense of patients in need and the public purse.

In research led by our provincial affiliate, the Ontario Health Coalition, 136 private surgery, diagnostic, and boutique physician clinics were surveyed across Canada, finding evidence that at least 65% are charging extra user fees. These put patients at impossible decisions to choose between their health and basic living costs, and patients at these clinics often feel they have no choice but to pay for medically unnecessary add-ons and upgrades.

Recent research by the Parkland Institute highlights the rise of private membership clinics in Alberta. Individuals pay a yearly fee to access both insured medical services alongside non-insured medical services such as dieticians and massage therapists. This has the effect of limiting access to those needed medical professionals to those who can pay rather than those who are in need.

While some of these activities operate within a grey area, others are explicitly allowed by provincial governments. Saskatchewan allows private MRls to operate under a one-for-one scheme where private clinics are supposed to provide a free MRI to someone on the public waiting list for every paid MRI they perform. The Manitoba government has also expressed an interest in private MRls, and two are currently under development.

Quebec has had longstanding issues with user fees. Following threats of a lawsuit by patient groups and health advocates, they recently passed legislation to curb these fees, but there are reports that some patients are still being charged illegal fees.

Finally, right now in British Columbia, there is a potentially precedent-setting case at the B.C. Supreme Court to determine whether a for-profit surgery clinic, which was found to engage in double billing, should be allowed to operate.

Despite all of these examples and others, the federal government has been reluctant to impose punitive action against provinces that are enabling the proliferation of extra billing. In the past 15 years, there have only been a few instances of payments being withheld for non-compliance. In at least one case, those payments were reimbursed following the introduction of new legislation.

The overwhelming majority of Canadians want the federal government to act in defence of public health care. A recent poll commissioned by the CHC found that 89% of respondents want the federal government to intervene in unlawful billing from private practices. While the federal government should penalize provinces that fail to comply, we also do not want Canadians and the health care system to bear the financial burden of these penalties.

This amendment provides a way to reward provinces and territories for taking positive action. However, this change is meaningless if the Minister of Health does not enforce the Canada Health Act in the first place or if the federal government is not making sufficient investments in our public health care system.

In closing, we urge the federal government to take a more proactive stance in protecting the ethos of equitable care for all through broader investments in public universal health care along with increased data collection and reporting.

If this amendment will encourage such action, then we most definitely welcome it.

Thank you.

[Athana Mentzelopoulos, Vice-President, Government Relations, Canadian Credit Union Association]

Thank you for the invitation to be here today.

Our association represents almost 260 credit unions and caisses populaires outside of Quebec. We serve over 5.6 million Canadians, contributing $6.5 billion to the country's GDP.

I think most of you are familiar with our sector. I do want to underline that credit unions are the only brick-and-mortar financial institutions in about 370 communities across Canada, providing an important alternative to big banks.

The regulatory burden remains an acute concern for credit unions. We have recent studies that show that small credit unions in Canada devote about five times more resources to regulatory compliance compared to their larger cousins.

In general, I'd like to make a statement about the fintech changes in Bill C-74. Our sector supports them, although we are reserving some judgment around the competitive impact.

However, I want to focus today on the proposed changes regarding banking terminology.

Our members were pleased with the commitment in budget 2018 to changes that allow credit unions to use generic banking terms, subject to disclosure. The commitment is, obviously, now reflected in the legislation.

The proposal would allow our members to continue to speak to Canadians about financial services in the language of financial services. We're grateful to members around this table and to the all-party parliamentary credit union caucus, amongst others, for the support in the campaign that we had earlier this year and last.

The caveat “subject to disclosure” is, we think, a signal that federal policy-makers have concerns about consumers' awareness of the regulatory structures surrounding all financial institutions, particularly due to the emergence and growth of unregulated financial institutions and the fintech sector in Canada.

We understand that federal policy-makers are looking for standardize practices about what information is shared with members and potential members regarding who regulates credit unions and who provides deposit insurance.

We are regulated, deposit-taking financial institutions. Our members remain concerned about the impact of extensive regulation on their ability to compete when such regulation doesn't contribute to the safety and soundness of the sector.

Provincial credit unions are incorporated, regulated, and insured at the provincial level. Regulatory authorities at the provincial level set credential standards and conduct reviews that are appropriate to co-operatively owned, deposit-taking institutions that have little exposure to international or foreign exchange markets.

We outperform other institutions in making high-quality loans. In fact, credit union losses have averaged less than half a per cent of total loans over the last two decades compared to our competitors. Provincial deposit insurance provides credit union members with protections equal to or greater than those available to bank depositors. Credit unions take extra steps to ensure that every dollar is protected.

The credit union system is committed to providing leadership in the area of consumer protection, and to ensuring that we continue to provide outstanding service. Our system puts the interests of its members first and foremost.

To this end, we are developing a national market code, or consumer code, that will support, advocate, and help to advance best practices. Our voluntary market code will ensure that Canadians understand the credit union difference, and they can be reassured of our commitment to transparency, integrity, and customer service. Among its many benefits, a voluntary code is the most effective way to ensure that consumers understand the regulatory and deposit-insurance framework of their credit union. In other words, it is our goal to meet the disclosure requirements through voluntary means.

There's ample evidence that voluntary codes are expedient, effective tools for ensuring consistent outcomes while also reducing jurisdictional challenges and cost. The Office of Consumer Affairs at Innovation, Science and Economic Development Canada has suggested that voluntary codes offer a number of benefits to consumers, as well as to government and business.

In closing, I would like to underline that I'm here to represent credit unions across the country that are asking for flexible use of generic banking terminology and for a reasonable approach to disclosure requirements.

Thank you.

[The Chair, Liberal, Wayne Easter]

I believe we have all of our witnesses in place, so I'll call the meeting to order.

By video conference, we have John Callaghan and Aaron Denhartog; Nicholas Bala and Pierre Fogal. Thank you, gentlemen, and thank you to all the witnesses.

We are continuing our hearings on Bill C-74, the budget implementation act, based on the budget tabled on February 27, 2018, and other measures. We will also be hearing from witnesses at a session this afternoon.

We'll start with you, Professor Bala, from the faculty of law at Queen's University.

Opposition Motion—Carbon Pricing

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, I will be sharing my time with the member for Bellechasse—Les Etchemins—Lévis.

It has been suggested that an effective response to climate change needs to be scientifically sound, environmentally sustainable, financially realistic, as well as global, comprehensive, and holistic. That may be a little optimistic in that we would not get all of the components in a planned approach in response to climate change, but I would suggest that the Liberals are failing on probably each and every one of these measures as they approach their climate change plan. They are really failing to meet most of these criteria.

As people in the House are aware, the government has introduced Bill C-74, which includes the greenhouse gas pollution pricing act, and talks about it being designed to impact behavioural change. My remarks are going to focus not only on how the specific issues I mentioned earlier would be ineffective but also how many people with the least options are going to be unduly penalized.

First, all Canadians should be very concerned and offended by the lack of transparency on this particular initiative. The Conservative shadow minister for finance has regularly pointed out the carbon tax cover-up. The finance department knows the numbers. The finance department has calculated the numbers in terms of the cost for individuals and families. When it was asked for that information, the government released it, but blacked out all of the information. It really is quite offensive that a government would impose a tax on Canadians and not be transparent about what that tax will actually cost.

I harken back to the election commitments the Liberals made, saying they would be a transparent government by default. On this and many other issues, whether it be the deficit or democratic reform, they are absolutely failing to live up to the commitments they made to Canadians in 2015. I suggest that for any credibility, they should be releasing those numbers and not waiting until months down the road, after they have imposed the tax. This, quite frankly, is wrong.

At the start of my speech, I talked about something that was scientifically sound. What have the Liberals done? They have set a pricing level that would start at $30 and move its way up to $50. The minimum calculation that any scientist makes in terms of being effective is $100, and I have seen some that go as high as $300, as what needs to be the price on carbon to create the behavioural changes the Liberals want to create. They are creating a cost for consumers, but it is not going to have the impact this tax needs to have.

It is important to note that it is being done in isolation from our continental partners. If we recall, China, India, and the U.S. are the major emitters and Canada is less than 2%. We need to be global in our approach. That is in the definition, “global approach”. Here we are, going down a path in which, quite frankly, the Liberals are pricing in a way that would hurt Canadians and not create the desired effect, and they are essentially doing it in isolation from the global major emitters.

The government and the Minister of Environment and Climate Change love to talk about British Columbia, so I will as well. That is the province I am from. They hold it up as a really great model. They have consistently said that. It was introduced in 2008 as a revenue neutral carbon tax, but let me explain what has been happening over the years. In actual fact, I was not upset or concerned when the British Columbia government introduced this revenue neutral carbon tax. It explained it appropriately. I was fortunate that it was not going to create a huge affordability issue for me and my family. The B.C. government was trying its best to offset impacts on those who could not afford it.

The Liberals hold it up as great example because, they say, it brought emissions down. Well, emissions went down across the world in 2008. They went down because we had a global recession. The analysis was that the carbon tax brought emissions down and then the economy recovered, absolutely. If we take a baseline from before, when the economy was ticking along quite nicely in 2007 and 2008, and then we had a global recession, we would have a significant drop in emissions. Ultimately Canada had a good recovery.

The Liberals also like to say that emissions dropped and the GDP did well. They love to compare it to Ontario, but Ontario was suffering the highest electricity prices and manufacturing was fleeing. They never actually compare it to provinces that had a similar type of economy, such as Saskatchewan and Alberta, and if we look at the economic growth in those two provinces, it was significantly more than British Columbia's economic growth. We cannot take gross measures and hope to be precise in what the impact of the actual carbon tax was, because there were so many things that were happening throughout that time period.

What was a revenue-neutral carbon tax started to drift. There was a solid commitment to the citizens of British Columbia that every penny the government took in carbon taxes would be returned to them. What happened in 2013-14 was that the Auditor General started to review and saw that what was initially revenue neutral was turning into other things. The B.C. government started to include many things that really were inappropriately included to suggest it was revenue neutral, but in actual fact it was drifting quite significantly from revenue neutrality.

I have to talk about the NDP in British Columbia, because it campaigned on “axe the tax”. It said it would axe the tax, that it would be gone. The NDP finally became government in 2017, and the first thing it did was to take away the revenue neutrality from the carbon tax. It actually legislated away revenue neutrality and then increased the tax. What was a well-designed, reasonable approach quickly became a cash grab under the control of the NDP government. It was general revenue for the government to use for whatever it wanted.

As a result, members will forgive me for being a little cynical about anyone who lauds the British Columbia tax as a great revenue-neutral model. I know the same thing could happen across the country in all the other provinces as they implement this imposed federal tax. It demonstrates how a commitment to revenue neutrality can quickly be reneged on, and there is nothing that will stop the federal government from doing the same thing.

The north is going to be the area most impacted by these changes. It has very limited density. In many cases, people rely on diesel fuel, and the north has extra costs associated with its mining. It is going to be significantly impacted.

The northern premiers signed on in good faith, with the understanding that the government would look at their particular and unique circumstances. What has happened? What does the bill the government has introduced do for the north? It has done nothing. The Liberals looked at a baseline for mining emissions and actually based it on a southern model, so what is going to happen is that mines in the north will be more significantly impacted than any others.

What we see here is that the government has introduced a measure that is going to be ineffective in meeting its goal. It has provided no accommodation for people who live in the north and in rural communities. It is really important that the Liberal government gets into its own areas of jurisdiction. It has policy levers it can use to meet reduction targets and meet its Paris targets. However, quite simply, what the government is doing is going to be a failure on way too many measures.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, as I look at Bill C-74 and its implications for something like mining initiatives in Nunavut, the way they have calculated things, there will be an extraordinary impact. It is estimated that will be $20 million a year. There has been no accommodation for mining projects in the north. I think people in the north are very concerned about the Liberal government moving forward. Quite frankly, capital will simply flow as they cannot be competitive with that $20-million increase and will go where their money is welcome.

What does the member have to say to those people in Nunavut when an employer, who is employing probably half of that population's workforce, is very concerned, and the Liberal government has done nothing to even consider the unique circumstances of the north?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, when it comes to Canada's economy and the environment, our government has been clear. We believe that the two go hand in hand. Canadians understand that pollution is not free, and they understand, as we do, that the most effective way to reduce greenhouse gas emissions is to put a price on carbon pollution. That is why we introduced the greenhouse gas pollution pricing act, part of the budget implementation act, otherwise known as Bill C-74, currently before the House.

By giving businesses and households an incentive to innovate more and pollute less, we are fulfilling our commitment to invest in growth while respecting and helping to protect our shared environment. This approach, investing in growth that strengthens and grows the middle class and helps people who are working hard to join it, is already paying off.

Let me take a moment to list the economic achievements we have reached in just two years in government. Since this government was elected, more than 600,000 new jobs have been created, most of them full time. Canada's unemployment rate is at the lowest level we have seen in more than 40 years. Since 2016, Canada has led the G7 in economic growth. The federal debt-to-GDP ratio, which is our debt relative to our economy, is not only on a downward track but is nearly at its lowest level in 40 years.

We know that investing in our communities and in our people is the best way to grow a modern economy. We have also taken steps to ensure a good business climate so that our businesses can succeed, grow, and hire. Canada is the best place in the world to invest and to do business, and we want to make sure that it stays as such.

This past week, A.T. Kearney came out with its best places to invest, or foreign direct investment index, as we economists like to call it. Canada ranked number two in the world and has moved up three places, just slightly behind the United States of America. This is important to note, because this report, which was put out by a non-partisan institute, incorporated the fact that 85% of the population of Canada is covered by a carbon-pricing mechanism.

We know that low and competitive tax rates allow Canada's entrepreneurs to invest in their businesses and create even more good, well-paying middle-class jobs. That is why we cut the small business tax rate to 10% this past January. It will fall even further next January to 9%. By this time next year, the combined federal, provincial, territorial average income tax rate for small business will be 12.2%, the lowest in the G7 and the third lowest among members of the OECD. This means that enterprises in my riding will see up to $7,500 in lower federal corporate income tax per year. This will help Canadian entrepreneurs and innovators do what they do best, which is create jobs. I note that 600,000 of them have been created over the last two and a half years. That is good news for Canadian businesses and great news for the hard-working people in my riding of Vaughan--Woodbridge and across this country.

There is more work to be done. That is why in budget 2018, we proposed the Canada workers benefit, a strengthened version of the working income tax benefit, something I long advocated for before I became a candidate for the Liberal Party and a member of Parliament in this government.

The new CWB will allow low-income workers to take home more money while they work. It is important to note that it will also encourage more folks to enter the labour force. To someone nearing retirement or who is retired and wants to go back to work and make some extra money, this will be a top-up. To students going to university who want to make some extra money on the side to help pay for their studies, this will be a little bit of a top-up. That is so important in the face of the demographic challenges Canada and many of the western countries are facing these days. For example, low-income workers earning $15,000 could receive up to $500 more from the CWB in 2019 than they would have received this year under the current system.

With automatic enrolment, literally hundreds of thousands of individuals across Canada, low-income, hard-working Canadians, will receive the benefit. It is estimated that 70,000 more Canadians will be lifted out of poverty by 2020.

Since 2016, the government has also been providing additional support to Canadian families through the Canada child benefit. Compared to the old system of child benefits which sent cheques to millionaires, the CCB gives low- and middle-income parents more money each month, tax-free, to help with the high costs of raising kids. I know this for a fact. I have two very precocious young daughters, who are the loves of my life, but it takes a few bucks to put them into some of their activities.

The CCB is simpler, more generous, and better targeted to give more help to people who need it most. Since its introduction in 2016, the CCB has lifted literally hundreds of thousands of kids out of poverty. That is something we need to applaud. It is a proud achievement of our government. In my riding, $59 million of Canada child benefit was distributed to residents. This helped out literally 15,000 or 16,000 young children. I know that every single one of those residents is grateful for this program and for the opportunity to receive something that helps them so much at home.

These investments and others our government is making in infrastructure, science, innovation, and skills and training, are all designed to achieve one goal: to ensure the benefits of a growing economy are felt by more and more people with good well-paying middle-class jobs, and people working very hard to join the “classe moyenne”.

We want Canadians to feel confident about the future, and be better prepared for what lies ahead. Part of achieving this entails making investments, and taking action to protect Canada's air, water, and natural areas for our children and grandchildren, while creating a world-leading clean economy. That is not just aspirational; it is happening today. There are literally hundreds of companies all over the world that are utilizing and testing technology for producing a cleaner environment.

Yesterday at the finance committee, I referenced how companies in Germany, for example, Daimler, are already turning trucks away from diesel and putting electric vehicles on the road. That is something that is very important. We must grasp these opportunities. That is why our government has put a focus on innovation, and research and development, so that the “supergrappes”, as they are called in French, the five clusters that we have identified, can ensure that Canadian companies are able to utilize or incentivize to create those world-leading technologies right here in Canada. That is something we need to do, and we are doing it.

Climate change is one of the most pressing challenges of our time. Unlike the party opposite, which in 10 years did not do anything, we have known from the beginning that inaction is not an option. That is why our government has worked for over two years to implement smart, practical measures to reduce emissions and protect the environment, while taking important steps to support literally tens of thousands of middle-class Canadians, 108,000 of whom live in my riding of Vaughan—Woodbridge, grow the economy and create good jobs.

Canadians know that addressing climate change and protecting the environment are important parts of ensuring a more prosperous and competitive economy for Canadians. This is exactly what the plan of “notre gouvernement” is delivering. We will put a price on what we do not want, pollution, in order to support things we need, including emissions reductions, clean innovations, and clean jobs, which are good middle-class jobs, for Canadians from coast to coast to coast. Through investments in greener infrastructure, cleaner transportation, energy efficiency, and emerging technologies, we will continue to help make our communities stronger, healthier, and more resilient. We believe this is the best way to support strong economic growth and secure a clean environment today and for many generations to come. That is what Canadians sent us here to do, and we are proud to do it.

We are doing the work that we spoke about during the election campaign. To use a hockey analogy, we are not ragging the puck; we are going to where the puck is, and we are going to make sure we score for Canadians. Whether it is through clean technologies producing those great jobs or leading innovations that will be adopted throughout the world, we will make sure our exporters and businesses stay competitive throughout this whole process. Frankly, 600,000 new jobs over the last two and a half years is not too bad at all.

Let me repeat that a clean environment and a strong economy go firmly hand in hand. We can have it no other way. This benefits all Canadians aujourd'hui, demain, and for all future generations.

[Gervais Coulombe]

I am not aware of any political decisions made in this sense. Carbon pricing mechanisms, like the federal system you have before you, ensure that the direct revenue generated by the instrument are returned to the provinces or to designated persons in the province, as my colleagues mentioned earlier.

The carbon pricing systems currently in place, be it in Quebec, Ontario, Alberta or British Columbia, generally end up as part of the price of a litre of gasoline, for example. The GST is applied on that amount and the provincial part of the HST, if any, of course, is returned to the provinces. The GST is outside the current debate on Bill C-74.

[The Chair, Liberal, Wayne Easter]

We shall call the meeting to order.

As everyone knows, we're dealing with the budget implementation bill, Bill C-74, and we are continuing from where we left off with our previous discussion on part 5.

The officials are here first to deal with the proposed greenhouse gas pollution pricing act. I think we're about to continue further questions.

Are there any?

Mr. Albas.