Bill C-86 (Historical)

Budget Implementation Act, 2018, No. 2

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

Part 1 implements certain income tax and related measures by
(a) introducing rules intended to provide greater certainty with respect to various tax consequences arising from certain foreign divisive reorganizations;
(b) ensuring that the existing cross-border anti-surplus stripping rule cannot be circumvented through transactions involving the use of partnerships or trusts;
(c) introducing rules to prevent misuse of the foreign accrual property income regime through the use of tracking interests involving foreign affiliates;
(d) ensuring consistency between the trading or dealing in indebtedness rules and the investment business rules within the foreign accrual property income regime;
(e) ensuring that the at-risk rules apply appropriately at each level of a tiered partnership structure;
(f) providing that the Minister of Public Safety and Emergency Preparedness can determine international operational missions for the purpose of the deduction available for income earned by members of the Canadian Forces or police officers on such missions;
(g) amending the synthetic equity arrangement rules and securities lending arrangement rules to prevent the artificial generation of losses through the use of equity-based financial instruments;
(h) ensuring that social assistance payments under certain programs do not preclude individuals from receiving the Canada Child Benefit;
(i) ensuring that an individual who is eligible to receive the Canada Workers Benefit can receive the benefit without having to claim it;
(j) introducing a refundable tax credit for the purposes of the climate action incentive;
(k) providing allocation rules for losses applied against Part IV taxes;
(l) preventing the creation of artificial losses on shares held as mark-to-market property by financial institutions;
(m) revising the rules relating to the non-partisan political activities of charities;
(n) ensuring that a taxpayer is subject to a three-year extended reassessment period in respect of any income, loss or other amount arising in connection with a foreign affiliate of the taxpayer;
(o) providing the Canada Revenue Agency with an extended reassessment period of an additional three years, to the extent that the reassessment relates to the adjustment of a loss carryback for transactions involving a taxpayer and non-resident non-arm’s length persons;
(p) extending the reassessment period of a taxpayer by the period of time during which a requirement for information or compliance order is contested;
(q) requiring that information returns in respect of a taxpayer’s foreign affiliates be filed within 10 months after the end of the taxpayer’s taxation year;
(r) enabling the disclosure of taxpayer and other confidential tax information to Canada’s bilateral mutual legal assistance treaty partners for the purposes of non-tax criminal investigations and prosecutions of certain serious crimes; and
(s) providing a deduction for employee contributions to the enhanced portion of the Quebec Pension Plan.
Part 1 also amends the Mutual Legal Assistance in Criminal Matters Act to, among other things, define the term “agreement” as applying, among other things, to tax information exchange agreements and tax treaties to which Canada is a party, and provide for orders to produce financial information for the purposes of investigation and prosecution of certain offences set out in subsection 462.‍48(1.‍1) of the Criminal Code. The enactment also amends paragraph 462.‍48(2)‍(c) of the Criminal Code to provide that information may also be gathered under Part IX of the Excise Tax Act and under the Excise Act, 2001.
Part 2 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by
(a) replacing the requirement that GST/HST be collected on a sale of carbon emission allowances with a requirement that the purchaser self-assess that GST/HST;
(b) extending the assessment period for group registered education savings plan trusts that make a special relieving election in respect of their past HST liability;
(c)  introducing GST/HST rules in respect of investment limited partnerships;
(d) clarifying the intended tax policy of excluding books that are sold by a public service body from the GST/HST rebate for printed books;
(e) introducing amendments similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested; and
(f)  introducing amendments similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes.
Part 3 implements certain excise measures by
(a) broadening the refund regime in respect of excise tax on diesel fuel to allow a vendor to apply for a refund where a purchaser will use excise tax-paid diesel fuel to generate electricity, if certain conditions are met;
(b) introducing an anti-avoidance excise measure relating to the taxation of cannabis in respect of the rules establishing the value of a cannabis product on which an ad valorem duty is calculated;
(c)  introducing amendments to the Air Travellers Security Charge Act and the Excise Act, 2001 that are similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested;
(d) introducing amendments to the Excise Act, 2001 that are similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes; and
(e) making housekeeping amendments to the Excise Act, 2001 in order to ensure consistency between the English and French version of the legislation.
Part 4 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 4 amends the Customs Tariff in order to simplify it and reduce the administrative burden for Canadian businesses and the Government of Canada by consolidating similar tariff items that have the same tariff rates and removing end-use provisions where appropriate. The amendments also clarify existing tariff provisions and make other technical amendments.
Division 2 of Part 4 amends the Canada Pension Plan to modify the calculation of the amount to be attributed for a year in which a contributor is a family allowance recipient and their first or second additional contributory period begins or ends.
Subdivision A of Division 3 of Part 4 amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things,
(a) establish thresholds below which the acquisition of control of certain entities, or the acquisition or increase of a substantial investment in them, does not require the approval of the Superintendent of Financial Institutions;
(b) allow financial institutions to invest in the Canadian business growth fund; and
(c) ensure that customers can provide consent electronically to receive electronic documents.
It also corrects a reference to the Insurance Companies Act in the Budget Implementation Act, 2018, No. 1.
Subdivision B of Division 3 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things,
(a) make technical amendments to clarify the method of calculating insured deposits, to remove outdated references, to repeal certain provisions not yet in force and to clarify that withdrawals made following the amalgamation of two or more member institutions or the continuance as a federal credit union will be considered to be made from pre-existing deposits and that the separation of accounts following the amalgamation is limited to a period of two years;
(b) exclude amounts borrowed by the Canada Deposit Insurance Corporation under paragraph 60.‍2(2)‍(c) of the Financial Administration Act from the calculation of the Corporation’s total principal indebtedness; and
(c) clarify that the liquidator of a member institution of the Canada Deposit Insurance Corporation must not apply the law of set-off or compensation to a claim related to insured deposits.
It also repeals two sections of the Financial System Review Act.
Subdivision C of Division 3 of Part 4 amends the Office of the Superintendent of Financial Institutions Act, the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things, clarify that providing legally privileged information to the Superintendent of Financial Institutions does not constitute a waiver of the privilege.
Division 4 of Part 4 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to remove the right of persons to decide not to proceed further with importing or exporting currency or monetary instruments that are required to be reported.
Division 5 of Part 4 amends the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act to, among other things, allow for the application, within the offshore area, of the provincial greenhouse gas pricing regime and to confer powers and impose duties and functions on the Canada–Newfoundland and Labrador Offshore Petroleum Board for the application of that regime. It also amends the Greenhouse Gas Pollution Pricing Act to provide that the provincial regime does not apply if the offshore area is mentioned in Part 2 of Schedule 1 to that Act. Finally, it amends the Offshore Health and Safety Act to postpone the repeal of certain regulations.
Division 6 of Part 4 amends the Canada Business Corporations Act to set out criteria for identifying individuals with significant control over a corporation. The Division also sets out a requirement for a corporation that meets certain criteria to keep a register of individuals with significant control and requirements respecting the information to be recorded in it. Finally, the Division includes applicable offences and punishments.
Subdivision A of Division 7 of Part 4 amends the Patent Act in order to
(a) provide a regulation-making authority for the establishment of requirements for written demands relating to patents;
(b) specify that an act committed for the purpose of experimentation relating to the subject matter of a patent is not an infringement of the patent and that licencing commitments that bind the owner of a standard-essential patent or the holder of a certificate of supplementary protection that sets out such a patent bind any subsequent owners or holders;
(c) expand the rights of a person in respect of a claim in a patent who meets the requirements to be considered a prior user;
(d) ensure that patent prosecution histories may be admissible into evidence for certain purposes;
(e) clarify when a late fee must be paid in respect of divisional applications as well as when the confidentiality period begins in the case where a request for priority is deemed never to have been made.
Subdivision B of Division 7 of Part 4 amends the Trade-marks Act to, among other things,
(a) add bad faith as a ground of opposition to the registration of a trade-mark and for the invalidation of a trade-mark registration;
(b) prevent the owner of a registered trade-mark from obtaining relief for acts done contrary to section 19, 20 or 22 of that Act during the first three years after the trade-mark is registered unless the trade-mark was in use in Canada during that period or special circumstances exist that excuse the absence of use;
(c) clarify that the prohibitions in subparagraph 9(1)‍(n)‍(iii) and section 11 of that Act do not apply with respect to a badge, crest, emblem or mark that was the subject of a public notice of adoption and use as an official mark if the entity that made the request for the public notice is not a public authority or no longer exists; and
(d) modernize the conduct of various proceedings before the Registrar of Trade-marks, including by providing the Registrar with additional powers in such proceedings.
It also makes certain housekeeping amendments to provisions of the Trade-marks Act that are enacted by the Economic Action Plan 2014 Act, No. 1 and the Combating Counterfeit Products Act.
Subdivision C of Division 7 of Part 4 amends the Copyright Act in order to specify that certain information is not permitted to be included within a notice under the notice and notice regime and to provide for a regulation-making power to prohibit further types of information from being included within such a notice.
Subdivision D of Division 7 of Part 4 enacts the College of Patent Agents and Trade-mark Agents Act. That Act establishes the College of Patent Agents and Trade-mark Agents, which is to be responsible for the regulation of patent agents and trade-mark agents in the public interest. That Act, among other things,
(a) requires that individuals obtain a licence in order to act as patent agents or trade-mark agents and that licensees comply with a code of professional conduct;
(b) authorizes the College’s Investigations Committee to receive complaints and conduct investigations into whether a licensee has committed professional misconduct or was incompetent;
(c) authorizes the College’s Discipline Committee to impose disciplinary measures if it decides that a licensee has committed professional misconduct or was incompetent; and
(d) creates new offences of claiming to be a patent agent or trade-mark agent and unauthorized representation before the Patent Office or the Office of the Registrar of Trade-marks.
That Subdivision also makes consequential amendments to certain Acts.
Subdivision E of Division 7 of Part 4 amends the Bankruptcy and Insolvency Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of in an insolvency proceeding or when the agreement relating to such property rights is disclaimed or resiliated in such a proceeding. It also amends the Companies’ Creditors Arrangement Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of.
Subdivision F of Division 7 of Part 4 amends the Access to Information Act and the Privacy Act to provide that the head of a government institution may refuse to disclose, under either of those Acts, information that is subject to the privilege set out in section 16.‍1 of the Patent Act or section 51.‍13 of the Trade-marks Act. It makes a related amendment to the Pest Control Products Act.
Subdivision G of Division 7 of Part 4 amends the National Research Council Act to clarify that the National Research Council of Canada has the authority to dispose of all forms of intellectual property that it develops, including future rights to such property and to provide the Council with the authority to dispose of real, personal, movable and immovable property, complementing the current provision in the Act that allows it to acquire such property.
Subdivision H of Division 7 of Part 4 amends the Copyright Act in order to modernize the legislative framework relating to the Copyright Board so as to improve the timeliness and clarity of its proceedings and decision-making processes. More specifically, it repeals spent provisions and
(a) codifies the Board’s mandate and establishes decision-making criteria;
(b) establishes new timelines in respect of Board matters, including earlier filing dates for proposed tariffs and longer effective periods for approved tariffs, and empowers the Governor in Council to make additional timelines by regulation;
(c) formalizes case management of Board proceedings;
(d) reduces the number of matters that must be considered by the Board;
(e) streamlines procedural steps across different tariff contexts, maintaining differences between them only where necessary;
(f) amends relevant enforcement provisions, including the availability of statutory damages for certain parties in respect of Board-set royalty rates and enforcement of Board-set terms and conditions; and
(g) modernizes existing language and structure for greater clarity and consistency.
Division 8 of Part 4 amends the Employment Insurance Act to, among other things, increase the maximum number of weeks for which parental benefits may be paid if these benefits are divided between claimants. It also amends the Canada Labour Code to, among other things, increase the aggregate amount of leave that may be taken by employees under sections 206.‍1 and 206.‍2 if that leave is divided between employees.
Division 9 of Part 4 enacts the Canadian Gender Budgeting Act in order to state the Government’s policy of promoting gender equality and inclusiveness by taking gender and diversity into consideration in the budget process. It also establishes related reporting requirements.
Division 10 of Part 4 amends the Bank Act to strengthen provisions that apply to a bank or an authorized foreign bank in relation to the protection of customers and the public. It implements enhancements in the areas of corporate governance, responsible business conduct, disclosure and transparency, and redress. It also amends the Financial Consumer Agency of Canada Act to strengthen the mandate of the Financial Consumer Agency of Canada and grant additional powers to that Agency.
Division 11 of Part 4 amends the First Nations Land Management Act to give effect to amendments to the Framework Agreement on First Nation Land Management respecting, among other things, procedures for obtaining community approval of a land code, the lands to which a land code may apply, the addition of lands to First Nation land by order of the Minister and the transfer of capital moneys.
Division 12 of Part 4 amends the First Nations Fiscal Management Act to, among other things,
(a) enable more Aboriginal organizations and First Nations to benefit from the provisions of the Act in order to strengthen their financial management systems and give them access to long-term financing;
(b) address certain administrative issues identified by the bodies established under the Act; and
(c) provide another option for First Nations to access moneys held by Her Majesty for their use and benefit.
Division 13 of Part 4 amends the Export and Import Permits Act to give the Minister of Foreign Affairs the authority to issue an import allocation for goods that are included on the Import Control List under subsection 5(6) of that Act.
Division 14 of Part 4 enacts the Pay Equity Act to establish a proactive process for the achievement of pay equity by the redressing of the systemic gender-based discrimination experienced by employees who occupy positions in predominantly female job classes. The new Act requires federal public and private sector employers that have 10 or more employees to establish and maintain a pay equity plan within set time frames so as to identify and correct differences in compensation between predominantly female and predominantly male job classes for which the work performed is of equal value. The new Act provides for the powers, duties and functions of a Pay Equity Commissioner, which include facilitating the resolution of disputes, conducting compliance audits and investigating disputes, objections and complaints, as well as making orders and imposing administrative monetary penalties for violations of that Act. The new Act also requires the Pay Equity Commissioner to report annually to Parliament on the administration and enforcement of the new Act.
Division 14 also amends the Parliamentary Employment and Staff Relations Act to provide for the application of the Pay Equity Act to parliamentary employers with certain adaptations and without limiting the powers, privileges and immunities of the Senate, the House of Commons and the members of those Houses.
It also makes the Minister of Labour responsible for the administration of the Federal Contractors Program for Pay Equity.
Finally, it makes related and consequential amendments to certain Acts and repeals the section of the Budget Implementation Act, 2009 that enacts the Public Sector Equitable Compensation Act.
Subdivision A of Division 15 of Part 4 amends the Canada Labour Code to, among other things,
(a) provide five days of paid leave for victims of family violence, a personal leave of five days with three paid days, an unpaid leave for court or jury duty and a fourth week of annual vacation with pay for employees who have completed at least 10 consecutive years of employment;
(b) eliminate minimum length of service requirements for leaves and general holiday pay and reduce the length of service requirement for three weeks of vacation with pay;
(c) prohibit differences in rate of wages based on the employment status of employees;
(d) address continuity of employment issues when a work, undertaking or business becomes federally regulated or in cases of contract retendering; and
(e) update group and individual termination provisions by increasing the minimum notice of termination.
Subdivision B of Division 15 of Part 4 amends the Canada Labour Code to allow the Minister of Labour to designate a Head of Compliance and Enforcement who will exercise most of the powers and perform most of the duties and functions that are related to the administration and enforcement of Parts II, III and IV of the Code.
Division 16 of Part 4 amends the Wage Earner Protection Program Act to, among other things, increase the maximum amount that may be paid to an individual under the Act, expand the definition of eligible wages, expand the conditions under which a payment may be made under the Act and create additional requirements related to Her Majesty in right of Canada’s right of subrogation in respect of payments made under the Act.
Division 17 of Part 4 amends the Bretton Woods and Related Agreements Act, the European Bank for Reconstruction and Development Agreement Act and the Official Development Assistance Accountability Act to harmonize the periods within which the reports under those Acts must be laid before Parliament in order to better communicate Canada’s international development efforts. It also repeals the definition of “official development assistance” in the Official Development Assistance Accountability Act and confers the power to define this expression by regulation.
Division 17 also enacts the International Financial Assistance Act, which provides the Minister of Foreign Affairs and the Minister for International Development with powers, duties and functions to support the delivery of a sovereign loans program, an international assistance innovation program and a federal international assistance program that promotes the mitigation of or adaptation to climate change through repayable contributions.
Division 18 of Part 4 enacts the Department for Women and Gender Equality Act which, among other things, establishes the Department for Women and Gender Equality to assist the Minister responsible for that department in exercising or performing the Minister’s powers, duties and functions that extend to and include all matters relating to women and gender equality, including the advancement of equality in respect of sex, sexual orientation, or gender identity or expression and the promotion of a greater understanding of the intersection of sex and gender with other identity factors. It also contains transitional provisions. Finally, Division 18 makes consequential amendments to other Acts.
Division 19 of Part 4 enacts the Addition of Lands to Reserves and Reserve Creation Act which authorizes a Minister, designated by the Governor in Council, to set apart lands as reserves for the use and benefit of First Nations. The Division also repeals Part 2 of the Manitoba Claim Settlements Implementation Act and the Claim Settlements (Alberta and Saskatchewan) Implementation Act.
Division 20 of Part 4 amends section 715.‍42 of the Criminal Code to require the publication of any decision not to publish a remediation agreement or order related to that agreement and of any decision related to the review of such a decision, to specify that the court may make the first decision subject to a condition, including one related to the duration of non-publication, and to allow anyone to request a review of that decision.
Division 21 of Part 4 enacts the Poverty Reduction Act, which sets out two targets for poverty reduction in Canada.
Division 22 of Part 4 amends the Canada Shipping Act, 2001 to, among other things,
(a) authorize the Governor in Council to make regulations respecting the protection of the marine environment from the impacts of navigation and shipping activities;
(b) authorize the Minister of Transport to
(i) make an interim order to mitigate risks to marine safety or to the marine environment, and
(ii) exempt any person or vessel from the application of any provision of that Act or the regulations if doing so would allow the undertaking of research and development that may enhance marine safety or environmental protection;
(c) increase the maximum amount of an administrative penalty that the Governor in Council may fix by regulation;
(d) authorize the Minister of Fisheries and Oceans, pollution response officers and accompanying persons to enter private property in the case of a discharge of oil from a vessel or oil handling facility; and
(e) double the administration monetary penalties for certain violations.
Division 23 of Part 4 amends the Marine Liability Act to modernize the Ship-source Oil Pollution Fund, including, among other things,
(a) removing the Fund’s per-occurrence limit of liability;
(b) in the event that the Fund is depleted, authorizing the temporary transfer to the Fund of funds from the Consolidated Revenue Fund;
(c) modernizing the Fund’s levy so that the Fund is replenished by receivers and exporters of oil;
(d) ensuring that the Fund’s liability for claims for economic losses caused by oil pollution aligns with international conventions;
(e) providing that the Fund is liable for the costs and expenses incurred by the Minister of Fisheries and Oceans or any other person in respect of preventive measures when the occurrence for which those costs and expenses were incurred has not yet created a grave and imminent threat of causing oil pollution damage;
(f) authorizing the provision of up-front emergency funding out of the Fund to the Minister of Fisheries and Oceans for significant oil pollution incidents;
(g) creating an expedited, simplified process for small claims to the Fund; and
(h) providing for administrative monetary penalties for contraventions of specified or designated provisions under that Act.

[Sonia Simard, Director, Legislative and Environmental Affairs, Shipping Federation of Canada]

Good morning. My name is Sonia Simard.

I am appearing today on behalf of the Shipping Federation of Canada.

Our objective is to provide the perspective of shipowners on some of the marine amendments contained in Bill C-86.

Although we are grateful for the opportunity to appear before this committee, we are indeed concerned with the very fast pace at which the bill is proceeding right now. Yesterday we submitted a brief to this committee in which we outlined some of our concerns with Bill C-86 and proposed some specific amendments.

More specifically, we recommended, first, that the marine transportation amendments be extracted from Bill C-86 and addressed as a stand-alone bill in order to ensure that there is sufficient time to proceed with a proper examination of the proposal.

If this is not done, we would urge this committee to proceed, at a minimum, with some specific amendments. Today we are addressing, more specifically, division 22 of Bill C-86.

That division provides the minister and the Governor in Council with additional powers in relation to regulation for protection of the environment. The shipowners and vessels we represent are committed to safe and sustainable transportation, so our concerns with the proposals are not with the objectives. We support the objectives, but we are asking for specific amendments to ensure that we have the proper safeguards around the new powers that are proposed.

Going into a little bit of detail, clause 690 of Bill C-86 would enable the minister to issue interim orders in the marine mode for any type of risk to marine safety or the marine environment that he or she views as requiring immediate action. These orders could remain in effect for up to three years without any of the basic safeguards provided in the normal regulatory process, such as consultation with affected stakeholders or regulatory impact statements that we do when we have regulations.

In our opinion, the proposed framework for interim orders in the marine mode is much broader than what we have found in other Canadian legislation. We have more detail in our brief, but just to make a summary of the common features we have seen in other Canadian legislation, usually ministerial interim orders are for a type of risk that meets a threshold, and that threshold is generally “significant risk” or “immediate threat”.

Furthermore, the lifetime duration of an interim order in the legislation we have seen is more tightly constructed. Those ministerial orders can stand alone for 14 days, after which time the Governor in Council must approve such interim orders and then extend the power by either one year, as we see in most of the legislation, or two years, as we see occasionally.

When we looked at the interim order framework being proposed here, we found it to be much broader. That's why what we have proposed is not an objection to the interim order, but rather, specific amendments to ensure that we find the proper safeguards around those interim order powers.

The second element we have outlined in our submission relates to clause 692 of the bill. I believe you have discussed this with the witnesses before. That's the power of the minister to vary Governor in Council recommendations. Again, we find powers to vary a regulation outside of the normal regulatory process. Because of the same concerns I have mentioned, we have also in our bill proposed specific amendments to ensure that we have proper safeguards.

The issue here is not whether or not there is a need to act fast. We understand that those situations happen. We just want to make sure we have proper safeguards around those powers.

On the other elements, we have brought more comments on division 22, but as we are running out of time, I'll ask you to refer to them in our brief.

The one point I would like to make in finishing is the fact that we unfortunately haven't been able to fully review the proposed amendments to the Marine Liability Act, but we will continue our review and we intend to submit comments in front of the Senate.

Thank you for your attention.

[Peter Fragiskatos, London North Centre, Lib.]

Thank you very much, and thank you all for being here today.

I want to focus the first part on pay equity. What we see here with Bill C-86 is the advancement of something quite important, something that we've been talking about doing as a country for a number of decades. While there are concerns that we've heard expressed, concerns that the bill isn't perfect, I don't think we live in a perfect world. What I want to put on the table is the fact that Bill C-86 and the pay equity provisions apply to federally regulated workplaces. However, there is a great deal to be said about the potential for this to go beyond, and now we can really begin a substantive conversation about pay equity in the wider society.

As part of that, I would like to get the view of those at the table on the existing reasons for a gap in pay between men and women. On the one hand, we can talk about structural barriers and the differences between men and women as well as false perceptions about what women can offer in the workplace and what men can offer.

Beyond that, though, there are other views. Mr. Cross, I don't mean to set this up as a straw-man argument, and I'll come back to you for your view, but your organization, the Macdonald-Laurier Institute, has said, and I quote here from your website:

The reasons for the pay gap between men and women are not particularly new. Women tend to be clustered in fields that traditionally pay less than the ones that men choose, and in occupations that pay less as well. They are also a lot more likely than men to take “breaks” from work (a really poor word to express what happens when you are home with small children), which does not help their long-term earnings power either.

That's the end of the quote. I wonder if we could delve into that.

Ms. Decter, I'll go to you first, and then Ms. Doucet. Do you agree with that particular view? Should we focus instead on structural barriers as we open up a conversation in the wider society about how to decrease the gap in pay between men and women?

[Rear-Admiral, Retired) Peter Ellis (Executive Director, Clear Seas Centre for Responsible Marine Shipping]

Madam Chair and committee members, thank you for giving me the opportunity to speak to you today.

Clear Seas Centre for Responsible Marine Shipping is an independent not-for-profit organization that sponsors research and produces communications and engagement programs related to sustainable marine shipping in Canada. We were launched in the summer of 2015—so we're about three years old—with seed funding from Transport Canada, Alberta Energy and the Canadian Association of Petroleum Producers.

Our purpose is to provide impartial, reliable and evidence-based information on shipping in Canada on the premise that better information leads to better decisions. Our independence is protected in our funding agreements and all of our program is accessible on our website at www.clearseas.org.

My observations today are based on some of the work we've done through our research and website publications, engagement with stakeholders, participation in many forums and working groups related to marine shipping, and of course observations from media and social media. I offer that the importance of marine shipping to our well-being and prosperity is underappreciated by most Canadians. To gauge Canadians' attitudes toward marine shipping, we conducted a public opinion poll in partnership with the Angus Reid Institute in the spring of 2016. We've just completed another round of polling on Canadians' attitudes to see if there are any trends. The data is currently being analyzed, and we aim to publish the results by the end of November.

A common theme raised in the 2016 poll and that persists today is the concern Canadians have for the potential environmental impacts of shipping. The proposed legislative changes are clearly aimed at enhancing confidence in and effectiveness of what is already a sound system.

Clause 689 of Bill C-86, for example, in providing the explicit authority of the minister to enter into agreements with indigenous groups, stakeholders and other levels of government clearly recognizes the complexity of the marine environment, its many jurisdictional interfaces, the issues of aboriginal rights and title, and the variability of local considerations. These realities are already recognized at the tactical level in such plans as the Canadian Coast Guard's greater Vancouver integrated response plan, for example. I suggest the development of such agreements should be subject to extensive engagement with stakeholders.

The proposed authority of the minister to make interim orders in clause 690 of the bill is an application of the precautionary principle, allowing greater flexibility to respond to short-fuse developments. Notwithstanding the interim nature of the orders, these decisions should be evidence-based and consider the best information available at the time. Enhancing the flexibility to intervene earlier in the cases where pollution may occur, but has not yet occurred, supports more timely action, which is a key element of effective response. Potentially preventing already rare pollution incidents or containing such events more swiftly to limit the spread of a spill are important elements of reducing risks associated with shipping. Likewise, the authority to enter private property and use private property in a response scenario is likely to improve effectiveness.

The provision of immunity for persons providing assistance, bounded by what is reasonable in the circumstances, is supported. It should be noted that this change may alleviate some concerns that have been expressed by American response personnel with regard to their liability in potential transborder operations. The changes to administrative and monetary policies applied judiciously will clearly support the polluter pays principle and enhance public confidence, which has been undermined somewhat by lengthy and inconclusive proceedings such as those following the Marathassa spill.

The changes to the ship-source oil pollution fund are also likely to increase confidence in the system by broadening the scope of what can be compensated. While extending the compensation available to economic loss indirectly related to pollution incidents makes sense and is consistent with the polluter pays principle, it raises significant questions as to the impacts on insurance rates, civil liabilities and other effects. These need to be clarified and clearly understood.

For some this change will not go far enough, as a portion of the population believes that compensation ought to extend to such areas as the loss of use of public land for recreational, cultural or other reasons.

Clear Seas supports the provisions of this bill, but notes that additional engagement with stakeholders is required as this bill moves forward.

I would also note that the focus seems to be on the response phase, with little being added to the preventive pillar.

Thank you again for giving me the opportunity to participate in this meeting.

I'm now ready to answer your questions.

[Professor Andrea Doucet, Canada Research Chair in Gender, Work and Care, Professor of Sociology, Women's and Gender Studies, Brock University, As an Individual]

Thank you.

Mr. Chair and members of the finance committee, I'm Andrea Doucet. I'm a Canada Research Chair in Gender, Work and Care, and I'm a Professor of Sociology in Women's and Gender Studies at Brock University.

My brief comments today on Bill C-86 are focused on one key issue: parental leave benefits, and specifically the introduction of a new EI parental sharing benefit in the amendments to the Employment Insurance Act, which is in division 8 in Bill C-86.

The EI parental sharing benefit, which will be available as of March 2019, is the newest addition to Canada's current package of maternity and parental benefits. It provides an additional five parental leave weeks paid at 55% wage replacement, or eight weeks paid at 33%, to parents who share EI benefits. This includes adoptive parents and same-sex couples.

The initiative was partly modelled on the Province of Quebec's parental insurance plan, QPIP. Specifically, three to five weeks of parental leave are designated for fathers and second parents, and this has led to almost 80% of Québécois fathers now claiming parental leave. Meanwhile, outside of Quebec, only 12% of fathers are using parental leave benefits.

Gender equality at home and at work are clearly stated goals of this new benefits practice. They are laudable goals that connect more broadly to the gender equality goals of the the so-called gender equality budget, but there are two significant problems and two key differences between this policy and the Quebec policy, and they centre on wage replacement rates and issues of eligibility.

In terms of wage replacement, the wage replacement rate of 33% to 55% is too low. The Quebec rate of 70% to 75% is a successful model that is in line with international research, especially from the Nordic countries, which shows that designated leaves for fathers and higher wage replacement rates increase the number of fathers who claim parental leave.

In terms of eligibility, many couples will not qualify for the new parental sharing benefit. It is only available to two-parent families where both parents qualify for benefits. My research, with Dr. Lindsey McKay and Dr. Sophie Mathieu, published in the Journal of Industrial Relations in 2016, leads me to make the following argument.

We believe that more than one-third of all families will likely not receive this benefit. This argument is based on three important claims from our comparative analysis of mothers access to leave benefits in Quebec versus nine other provinces. We used Statistics Canada data. There was no data on people living on reserves or from the territories. It was from Quebec and the nine provinces.

My three points are the following. First, outside of Quebec, 25% of mothers do not qualify for benefits because they do not have the required 600 insurable hours in the 52 weeks prior to giving birth. Women can work their entire lives paying into EI, but if they do not have those hours in the year before birth, they don't qualify.

Second, 36% of all mothers outside of Quebec do not receive parental benefits. This is due to a combination of their ineligibility and the limitations of provincial employment standards and entitlements.

Three, over half of mothers—56%—in low-income families in these nine provinces are excluded from leave benefits. In Quebec, only 15% of low-income mothers are excluded from leave benefits.

I'll conclude with two final points.

A broader GBA+ analysis demands that we look more closely at who is excluded from the new EI parental sharing benefit. Notably, many low-income families will be excluded, and lone parents will be excluded.

Finally, my work with McKay and Mathieu argues that this new extension of parental benefits, without attending to issues of wage replacement, eligibility and access, will lead to a growing divide between what we refer to as “parental leave-rich” and “parental leave-poor”, or “care-rich” and “care-poor” households.

Thank you very much.

[Fay Faraday, Co-Chair, Equal Pay Coalition]

Thank you.

The Equal Pay Coalition represents 44 different associations, businesses, professional women, unionized women, non-union women and community groups across the province of Ontario. We also coordinate a broader pay equity network on the federal level that includes 134 women's groups from coast to coast to coast. We make the representations on behalf of them.

While the pay equity legislation that is in Bill C-86 is an important first step, there are a number of amendments that need to be made to the legislation if it is actually to be effective in protecting women's rights. I want to anchor the amendments in a number of key principles that should guide you in that amendment process.

The first is that pay equity is a fundamental human right. This is not an option. This is not something that is good to have. It is a fundamental international human rights commitment that Canada signed onto in the ILO convention 100 in 1972. In addition, it is a protected right under the Canadian charter.

Eradicating the pay equity gap is, then, a mandatory human rights obligation, and the pay equity legislation must increase the efforts to close the gap. It must strengthen and not weaken or undercut them. Those are key principles.

As well, under section 2(d) of the charter, workers have the constitutional right to union representation in the workplace, so active union participation must be a key part of the legislation. Also, the legislation must be attentive to current problems with the fissuring workplace if it's to be effectively enforced.

I'm going to identify some key amendments that need to be made.

One is the amendment to the purpose clause, which you've heard.

Making fundamental human rights subject to the “diverse needs of employers” fundamentally undercuts the legislation, and it is absolutely unprecedented in Canadian human rights legislation. That must go. That's non-negotiable.

In addition, you need to have a definition of “employer” that encompasses the fissured workplace that exists right now. What that means is capturing all the contracting out and subcontracting that allows employers to distance themselves from rights violations. That is missing in the legislation.

As well, there are a number of provisions you've included in the legislation that have already been found to be unconstitutional.

With some of those in fact the legislation actually gives less protection in some areas than the Canadian Human Rights Act currently does. For example, it has less protection in the compensation for part-time and temporary workers than currently exists.

It also prevents women from having access to the broader human rights protection under section 7 and section 10 of the Canadian Human Rights Act.

Also, the pay equity act does not close all the different gaps in compensation that are discriminatory. Access to those broader protections is absolutely critical.

You've included in this legislation provisions around retroactivity that the—

[Ann Decter, Director, Community Initiatives, Canadian Women's Foundation]

Good morning. I'm Ann Decter from the Canadian Women's Foundation, and I thank you for the invitation to speak to you today on behalf of the foundation with regard to Bill C-86.

The Canadian Women's Foundation is Canada's only public foundation dedicated to women and girls. We fund grassroots women's organizations and women-serving community programs and invest in building the women's sector through knowledge mobilization, networking, collaboration and advocacy.

We were pleased to see key commitments to women's equality in the 2018 federal budget, and we welcome the next steps on those commitments in Bill C-86. I will be speaking to three of them.

Among its myriad provisions, Bill C-86 will establish the department of women and gender equality, transforming Status of Women Canada into a department. We celebrate the retention of “women” in the name of the department, thus ensuring the link is maintained to historic milestones like the Royal Commission on the Status of Women in Canada, which in the early 1970s made recommendations that are still on our wish list.

When we talk about women's equality, we are talking about equality for the majority of the population. Our recent research on the state of women's equality in Canada indicates that violence against women, economic security and gendered reconciliation and decolonization are key priorities to advance gender equality in this country.

Approaches needed to advance equality for women, who make up slightly over half the population and, notwithstanding the grumblings of premiers, have the overriding protection of charter rights, may differ greatly from approaches that would advance the much smaller population identified in the act as “gender-diverse”, who lack charter protections while often facing social persecution on a daily basis.

We encourage the minister for women and gender equality, as she will soon be, to examine the question of what structures are needed both inside and outside of government to ensure the government remains on a dynamic path towards women and gender equity and equality.

Our submission to the 2018 federal budget consultation called for intersectional gender-based budgeting across all federal departments. We recommended that Status of Women Canada establish a gender-budgeting plus resource centre funded and mandated to embed intersectional gender-based analysis across the federal government.

Our reading of the broad strokes of the Canadian gender budgeting act is consistent with this approach. We welcome it and recommend that the new department for women and gender equality be placed on a growth plan and its budget on a path of significant annual increases to ensure its leadership capacity in this area.

We agree wholeheartedly with the preamble to this act that “Canada's long-term economic success depends on an inclusive society in which all individuals have the ability to contribute to their full potential” and note that women became the majority of university graduates in 1990 and have now surpassed men in education across the population. The Canadian economy needs women, and that means all women.

The Canadian Women's Foundation welcomes the introduction of proactive pay equity legislation. We fully support our colleagues from the pay equity coalition, who are experts on this issue, and you will hear from them today.

I have a few quick points.

For unionized women, it's good. The legislation supports them to advocate for their pay equity rights and for their unions to negotiate pay equity plans. The non-union worker, however, is on her own. She may find it difficult to comprehend, and the act lacks any provision for a legal support centre to assist her.

The opening clause includes “the diverse needs of employers” in the purpose language. This could give employers' needs precedence instead of centring on the needs of women in federally regulated workplaces.

This act is silent on pay transparency. Disclosure of pay practices goes to the heart of compliance and needs to be added here or in accompanying legislation.

We look forward to corrections to these issues in the pay equity act and to implementation of this important legislation.

Thank you for the opportunity to speak to you today.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order.

We're starting our first set of witnesses beyond the department. Pursuant to Standing Order 108(2), we are studying the subject matter of Bill C-86, a second act to implement certain provisions of the budget tabled in Parliament on February 27, 2018, and other measures.

Welcome, witnesses.

We'll start with the Canadian Association for Retired Persons, Ms. Morris.

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call to order this meeting of the Standing Committee on Transport, Infrastructure and Communities, 42nd Parliament.

Pursuant to Standing Order 108(2), we are doing a study of the subject matter of clauses 688 to 747, also referred to as divisions 22 and 23, of Bill C-86.

As witnesses, in the first part of our meeting, we have, from the Department of Transport, Natasha Rascanin, Assistant Deputy Minister, Transformation; and Marc-Yves Bertin, Director General, Marine Policy.

From the Department of Fisheries and Oceans, we have Julie Gascon, Director General, Operations, Canadian Coast Guard; and Marc Sanderson, Acting Director General, National Strategies, Canadian Coast Guard.

Welcome to all of you.

I would ask that you keep your comments to five minutes or under in order to give the committee sufficient time for their questions.

Whoever would like to start can go ahead.

[Gerald Kerr-Wilson]

That was an issue where there was almost unanimity amongst users of the Copyright Board. In every decision, you're going to have someone who's happier than someone else, but everyone agreed that decisions had to get out more quickly.

We were dealing with situations where the board was setting prices to be paid for music five years ago. No one knew what the price to be paid today was. If the government follows through on the regulatory authority that it's proposing under Bill C-86, that problem, at least, will be substantially resolved.

[Gerald Kerr-Wilson]

I'll start. I do spend quite a bit of time appearing before the Copyright Board.

Speed and retroactivity of decisions were a large concern for a number of users of the Copyright Board, on both the collective side and the licensee side. The measures put in place, or proposed in Bill C-86, the budget implementation act, go a long way. They certainly give the government the tools to set deadlines for the Copyright Board to issue decisions. They make it clear that tariffs have to be proposed further in advance and for a greater number of years. If all these measures are acted upon and regulations are put in place, we could actually dramatically reduce the problems we've seen in the past with the timeliness of decisions and long retroactivity.

[Eleanor Ryan, Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance]

Thank you, Mr. Chair.

My name is Eleanor Ryan. I'm here with my colleagues from the Department of Finance and with Brigitte Goulard, Deputy Commissioner of the Financial Consumer Agency of Canada. We're honoured to have the opportunity to present this legislation to you.

Division 10 of Part 4 of Bill C-86, entitled “Financial Consumer Protection Framework”, follows upon the government's commitment made in Budget 2018 to continue to advance consumers' rights and interests when they deal with their bank, and to strengthen the tools at the disposal of the Financial Consumer Agency of Canada.

Division 10 represents a consolidation of the existing legislation and regulatory provisions applying to the relationship between banks and their customers, and new measures intended to address the issues identified in two reports published by the Financial Consumer Agency of Canada in the spring of 2018.

The first report was a comprehensive review of bank sale practices. This report identified a number of risks relating to how bank products are sold to customers. The second report examined best practices for supervision of financial consumer protection.

[David Fewer, Director, Canadian Internet Policy and Public Interest Clinic]

Thank you, Mr. Chair.

Good afternoon, members of the committee. My name is David Fewer. I'm the director of CIPPIC, which is the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic at the centre for law, technology and society at the University of Ottawa.

We are Canada's first and only public interest technology law clinic. We're based in the university. We essentially bring lawyers with expertise in technology law issues together with students to advocate on behalf of the public interest on technology law issues.

Our work resides at the heart of Canada's innovation policy agenda. We work on everything from privacy to data governance and artificial intelligence, network neutrality, state surveillance, smart cities policies and, of course, copyright policy. Our work essentially is to ensure respect for Canadians' rights on technology policy, as governments and courts respond to Canadians' use of ever-changing, new technologies.

I want to start with two background comments with respect to approaching copyright policy. Number one is the concept of balance. It's been long settled now in Canadian copyright policy that balance is essential to the overall scheme and objective of the act. That means Canadian copyright policy must be directed towards achieving a balance between providing a just reward for creators and owners of copyright works and the public interest in the dissemination of works more broadly. This guiding principle is basically the touchstone of copyright policy and should be central to any review of the Copyright Act.

That brings me to my second background point, which is the USMCA. The recent conclusion of the renegotiated NAFTA agreement upsets the balance in Canadian copyright law policy. This is not the place to go through an extensive review of the changes to copyright law that will be required by the legislation, but three that jump out to me were a copyright term extension, the enhanced digital lock provisions which were further unsettling a troubling area of Canadian copyright policy, and the new customs enforcement rights, revamping an area of law that we had just within the last two years upgraded.

These are just some of the benefits to copyright owners that are promised in this trade agreement. We would ask the committee to engage in these hearings with a view to resolving or restoring the balance that's at the heart of Canadian copyright policy.

Substantively, I want to talk about three specific points. One is digital locks. To the extent that this can be done by Canadian copyright policy, we should be looking to roll back the overprotection of the digital lock provisions. There's an incredible imbalance between the rights that copyright owners enjoy with respect to digital locks versus the rights they enjoy with respect to the content itself. The content itself respects a healthy balance. It has a nod towards future creativity and innovation policies. The digital lock provisions do not.

Many provisions of the Canadian Copyright Act intended to benefit future creators and innovators are locked out where a digital lock is used, and it's difficult to justify that on any kind of reasoned analysis of Canadian copyright policy.

We would ask that the USMCA provisions be studied with a view to determining how best to maintain fair and flexible dealings with content in the face of digital locks. Essentially we say that draconian digital lock provisions deter and undermine Canadian innovation policy, and they undermine digital security. This is not just a user issue. It's an innovation issue. Creators such as documentary filmmakers and new forms of artists—appropriation artists, for example—encounter difficulties in the face of digital locks. That content is beyond their reach.

We would also ask that we look to the extent to which we can restrict criminal circumvention to commercial activity because of the tremendous disincentive of criminal prosecution for innovation and artistic work in the face of digital locks.

Second, I want to turn to fair dealing. CIPPIC has long asked that Canada look to make the list of fair-dealing purposes illustrative, rather than exhaustive. If the dealing is fair, it ought to be legal. That's the bottom line. Failing that, CIPPIC would support extending fair dealing to transformative dealings, to recognize different kinds of authors, such as appropriation artists and documentary filmmakers. Transformative dealings aren't covered well, within the existing fair dealing paradigm.

We would also echo the repeated calls that this committee has heard to extend fair dealing to what I'll call AI activities. We would look for a specific exception for informational analysis.

Finally, related to fair dealing, CIPPIC would call for no contractual overrides of fair dealing. We've talked about privacy already. Our privacy rights have a very difficult time with terms of use, which have privacy policies that no consumer or user ever sees, thereby stripping our privacy rights away. Copyright, which is an innovation policy, should not suffer from the same burden.

Other jurisdictions have done this, particularly within the context of the data mining exception, in jurisdictions such as Britain. Canada should be looking to this too.

Finally, I have a brief comment on the notice and notice system. CIPPIC supports the changes to the system that were recently tabled in Bill C-86 to curb abuses of that system, but we would actually echo Mr. Kerr-Wilson's comments about the need for adverse consequences for reckless or deliberate misuse of that system.

Thank you.

[Scott Smith, Senior Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce]

Thank you very much, Mr. Chair, and members of the committee, for the opportunity to address you today.

I'm actually here for the Canadian intellectual property council, which is a special council within the Canadian Chamber of Commerce—the national voice of business, representing over 200,000 businesses across Canada.

The CIPC is dedicated to improving the intellectual property rights regime in Canada and has broad-based participation from a variety of industries, including manufacturers, the entertainment industry, information and communications technologies companies, telecommunications and logistics firms, legal professions, retailers, importers and exporters, pharmaceutical and life science companies, and business associations.

The leaders of the CIPC are senior executives from corporations and associations who have a strong understanding of their industries' challenges and recognize the need for the protection of IPR in Canada. The mandate of the council is to promote an improved environment in Canada for businesses interested in innovation and intellectual property, by raising the profile of IPR among key policy-makers in the government and the general public.

I'd like to start by thanking the government for efforts to recognize the link between innovation and intellectual property rights in its intellectual property strategy.

Our counterparts at the Global Innovation Policy Center, GIPC, undertake a systematic evaluation of the strength of the IPR regimes in 45 economies. This year, Canada ranked 18, but the score has improved from previous years. Measures such as digital rights management and the enablement provisions introduced in the last update of the Copyright Act are important tools to help protect the significant investments made by creators in Canada. We would like to see those measures preserved going forward.

I'd also note that we are pleased to see that many of the suggestions put forward by the CIPC regarding changes to the Copyright Board have been reflected in Bill C-86, announced last week.

We believe it's important to have a consistent, timely and predictable board, and one that supports and encourages new and existing businesses operating in Canada's cultural industries, through a more efficient and productive tariff-setting process; through provisions to enact reforms by way of regulation, particularly as it pertains to delays; through the provision to support independently negotiated tariffs; and through the adoption of clear decision-making criteria.

We look forward to seeing these provisions come into force in the spring of 2019.

I'd like to focus the balance of my comments today on two issues: addressing online piracy, and keeping the door open to research and innovation for artificial intelligence.

I'll start with a pervasive problem: the significant threat of online piracy that now includes new forms that were not dominant the last time the Copyright Act was reviewed. This includes the commercial operation of illegal online streaming platforms and set-top boxes preloaded with illegal add-ons that provide users with unauthorized access to entertainment content.

According to the MUSO piracy insight report, Canada is now one of the highest consumers of global web streaming piracy. In fact, this same report finds that Canada has moved up to eighth in the global country rank by piracy visits, totalling 1.88 billion visits to all piracy sites in 2016. That web streaming is now the most popular type of piracy in Canada.

In the Government of Canada's own study on online consumption of copyrighted content that was issued in May 2018, one quarter of all Canadians self-reported as having consumed illegal content online. Sandvine also estimates that 10% of Canadian households use illegal subscription services.

The economic harm caused by online piracy is all too real. According to research by Frontier Economics, the commercial value of digital piracy of film in 2015 alone was estimated at $160 billion worldwide. In Canada, where the film and television industry alone accounted for over 170,000 jobs in 2016 and 2017, and generated $12 billion in GDP for the Canadian economy, the impact of online piracy is significant.

Unfortunately, the current tools available in the Copyright Act are insufficient to deal with these new threats. While there is no single solution to piracy, the Copyright Act should be modernized and leverage tools proven to be effective in helping to reduce online piracy, including those available in Europe.

CIPC encourages the government to enact provisions that expressly allow rights holders to obtain injunctive relief from competent authorities, such as site blocking and de-indexing orders against intermediaries whose services are used to infringe copyright.

Illegal content is accessed through Internet intermediaries, and they are best placed to reduce the harm caused by online piracy. This principle has long been recognized throughout Europe where article 8(3) of the EU copyright directive has provided the foundation for copyright owners to obtain injunctive relief against intermediaries whose services are used by third parties to infringe copyright.

The need for modern and effective tools to help address online piracy has been supported by the broadest range of Canadian stakeholders, including Canada's largest Internet service providers, all of whom have recognized the harm caused by international piracy sites that harm Canada's creative economy.

Even the CRTC has acknowledged the harms caused by piracy in considering the application filed by the FairPlay Canada coalition earlier this year, but ultimately pointed to the current review of the Copyright Act as the appropriate forum to address this pressing issue. Building on precedents that already exist in Canada, the Copyright Act should be amended to expressly allow rights holders to obtain injunctive relief against intermediaries by site blocking and de-indexing orders of infringing sites.

I'll conclude with preserving an opportunity, and I'm going back to data here. Data, and the techniques and technologies employed to collect and analyze it, will allow Canada and the world to solve some of the world's most pressing economic, social and environmental problems. Data is now the engine of economic growth and prosperity. Countries that promote data's availability and use for society's good and economic development will lead the fourth industrial revolution and give their citizens a better quality of life.

Machine-learning frequently necessitates the use of incidental copying of copyrighted works that have been lawfully acquired. Works are used, analyzed for patterns, facts and insights, and those copies are used for data verification. To avoid the risk of blocking this activity, we suggest that any legislation that deals with the applicability of copyright infringement liability rules should examine carefully how these rules apply to all stakeholders in the digital network environment as part of ensuring the overall effectiveness of a copyright protection framework.

Thank you for the opportunity to present to you today.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order on the subject matter of the budget implementation act 2018, Bill C-86.

We jumped ahead and did division 4, because we thought it might take longer.

With us to deal with part 4, division 3, financial sector renewal, we have Mr. Dussault, Senior Director; Mr. Paradis-Béland, Senior Economist; and Mr. Fournier, Legislative Policy.

Welcome Mr. Dussault.

[Gerald Kerr-Wilson, Partner, Fasken Martineau DuMoulin LLP, Business Coalition for Balanced Copyright]

Thank you very much, Mr. Chairman.

Good afternoon, members of the committee.

My name is Jay Kerr-Wilson. I'm a partner with Fasken Martineau and am appearing today on behalf of the Business Coalition for Balanced Copyright, or BCBC.

The members of BCBC include Bell Canada, Rogers, Shaw, Telus, Cogeco, Vidéotron and the Canadian Communication Systems Alliance. BCBC's members support a copyright regime that rewards and protects creators, facilitates access to creative content, encourages investment in technology and supports education and research.

The exceptions that were added to the Copyright Act in 2012 were necessary to eliminate uncertainty that would restrict or inhibit the development of innovative new products and services. Reducing or eliminating these exceptions will put at risk hundreds of millions of dollars in investments. It will cause disruptions in the rollout of legitimate new services that would otherwise provide copyright owners more opportunity to earn revenue by giving Canadians more access to more content.

The coalition does not believe that new copyright levies should be imposed on ISPs or other intermediaries in an attempt to create new sources of revenue for Canadian creators and artists.

First, requiring ISPs to make content-specific payments is a clear violation of the principle of network neutrality.

Second, and more important, the Copyright Act is not the appropriate statute for promoting Canadian cultural industries. Canada's obligations under international treaties require that any benefit that is granted to Canadian copyright owners must also be provided to non-Canadians when their works are used in Canada. As a result, most of the money collected from Canadians would go to the U.S.

Third, copyright owners are already paid for lawful online activities through commercial licence agreements, and in the case of SOCAN, tariffs approved by the Copyright Board. Forcing Canadians to pay another fee for receiving these same lawful services is a form of double-dipping, a practice that was rejected by the Supreme Court in ESA v. SOCAN.

The government has other, far more appropriate policy tools at its disposal to promote Canadian cultural content and Canadian creators. Using these tools enables measures to be specifically targeted to Canadian creators in a way that the Copyright Act cannot.

The BCBC supports the addition of a new exception for information analytics. A human being can access and read a document without having to make a new copy or reproduction. Automated processes need to make technical copies in order to read and analyze the content of documents. Just as Parliament recognized the need in 2012 to create exceptions to apply to the reproductions that are required to operate the Internet, the BCBC believes that a new exception is required to eliminate any uncertainty regarding the making of reproductions for automated information analysis.

The BCBC recommends an additional improvement to the existing “notice and notice” regime. In Bill C-86, the budget implementation act, the government introduced amendments to prohibit the inclusion of settlement demands and infringement notices. The BCBC strongly supports this proposal but believes additional amendments are necessary to protect consumers and to give ISPs the tools they need to stop these settlement notices.

Bill C-86 makes clear that ISPs are not required to forward settlement demands to subscribers; however, it contains no useful deterrent to dissuade rights holders or other claimants from including settlement demands in copyright notices. We believe the onus for excluding settlement demands from copyright notices must rest solely with the rights owner, not the ISPs, who currently face liability for failing to forward compliant notices.

The other needed change is to adopt regulations establishing a common standard for infringement notices. Canadian ISPs and the motion picture industry co-operated on the development of a standard format known as the Automated Copyright Notice System, or ACNS, which is freely available at no charge and reflects Canadian requirements. The government should enact regulations establishing the form and content of notices based on ACNS.

The BCBC is aware that the ministers have written to this committee and the heritage committee with respect to the changes to the Copyright Board and collective management of copyright. The BCBC supports many of the changes that have been introduced to improve the efficiency of Copyright Board proceedings.

The coalition is concerned that some of the changes will eliminate important protections for licensees and could result in monopoly copyright licensing practices that are no longer transparent or subject to regulatory oversight.

The coalition strongly supports amendments that will make it easier for copyright owners to effectively enforce their rights. The act should allow for injunctive relief against all of the intermediaries that form part of the online infrastructure distributing infringing content. For example, it should be explicit that courts can issue a blocking order requiring an ISP to disable access to infringing content available on preloaded set-top boxes or an order prohibiting credit card companies from processing payments for infringing services.

The BCBC recommends that the Copyright Act be amended to eliminate a potential conflict between a court order for ISPs to block access to infringing services and the CRTC, using its authority under section 36 of the Telecommunications Act, to prohibit that blocking.

The BCBC finds it unacceptable that an Internet service provider could be ordered by a court to block access to an infringing Internet service and prohibited by the CRTC from complying with that court order. This conflict must be resolved in favour of the court order.

Finally, the BCBC warns the committee against unfounded claims of a value gap between the music industry and Internet services. The claims made by the music industry and the amendment they're demanding ignore how rights are cleared through commercial transactions. If adopted, these measures would disrupt well-established commercial relationships and would ultimately result in substantial net outflow of money from Canadians to U.S. record companies. For example, the music industry wants the definition of “sound recording” revised so that record companies and performers get paid public performance royalties when sound recordings are used in soundtracks in film and television programs.

The music industry appears to suggest performers and record labels aren't paid for the use of recorded performances in soundtracks. This is simply false.

Record companies are free to negotiate the terms of using recorded music and soundtracks with the movie producer. Performers have to agree to the use of their performances in soundtracks and are entitled to demand payment through their agreements with the record labels. Furthermore, the Copyright Act already provides detailed provisions protecting the rights of performers to be paid for the use of their performances. Revising the definition of “sound recording” as suggested would result in record labels and performers getting paid twice for the same use.

If the committee is concerned about improving the financial fortune of performers, it could recommend that the division of royalties between record companies and performers in subsection 19(3) be adjusted. The simple change would immediately put more money in the pocket of every performer who's performance is played on the radio, streamed online, or played in bars and restaurants.

Thank you. Those are my comments. I look forward to your questions.