Bill C-97 (Historical)

Budget Implementation Act, 2019, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures

Part 1 implements certain income tax and related measures by
(a) providing a temporary enhanced first-year capital cost allowance rate of 100% in respect of eligible zero-emission vehicles;
(b) removing the requirement that property be of “national importance” in order to qualify for the enhanced tax incentives for donations of cultural property;
(c) providing a temporary enhanced first-year capital cost allowance rate in respect of a wide range of depreciable capital properties, including a temporary first-year capital cost allowance rate of 100% in respect of
(i) machinery and equipment used for the manufacturing or processing of goods, and
(ii) specified clean energy equipment;
(d) ensuring that social assistance payments under certain programs are non-taxable, are not included in income for the purposes of determining entitlement to income-tested benefits and credits and do not preclude an individual from being considered a “parent” for the purposes of the Canada Workers Benefit;
(e) repealing the use of taxable income as a factor in determining a Canadian-controlled private corporation’s annual expenditure limit for the purpose of the enhanced scientific research and experimental development tax credit;
(f) providing support for Canadian journalism;
(g) introducing the Canada Training Credit;
(h) amending the Income Tax Act to reflect the current regulations for accessing cannabis for medical purposes;
(i) eliminating the requirement that sales be to a farming or fishing cooperative corporation in order to be excluded from specified corporate income for the purposes of the small business deduction;
(j) extending the mineral exploration tax credit for an additional five years;
(k) ensuring that business income of a communal organization retains its character when it is allocated to members of the communal organization for tax purposes;
(l) increasing the withdrawal limit under the Home Buyers’ Plan and amending how it applies on the breakdown of a marriage or common-law partnership;
(m) extending joint and several liability for tax owing on income from carrying on business in a TFSA to the TFSA’s holder and limiting the TFSA issuer’s liability for such tax;
(n) supporting employees who must reimburse a salary overpayment to their employer due to a system, administrative or clerical error;
(o) expanding tax support for electric vehicle charging stations and electrical energy storage equipment;
(p) allowing joint projects of producers from Canada and Belgium to qualify for the Canadian film or video production tax credit; and
(q) ensuring appropriate pension adjustment calculations in 2019 and subsequent tax years for registered pension plans that reference the enhanced Canada Pension Plan.
Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures proposed in the March 19, 2019 budget
(a) to provide GST/HST relief in the health care sector by relieving the GST/HST on supplies and importations of human ova and importations of in vitro embryos, by adding licenced podiatrists and chiropodists to the list of practitioners on whose order supplies of foot care devices are zero-rated and by exempting from the GST/HST certain health care services rendered by a multidisciplinary team of licenced health care professionals; and
(b) by introducing amendments to ensure that the GST/HST treatment of expenses incurred in respect of zero-emission passenger vehicles parallels the income tax treatment of those vehicles.
Part 3 implements certain excise measures proposed in the March 19, 2019 budget by changing the federal excise duty rates on cannabis products that are edible cannabis, cannabis extracts (including cannabis oils) and cannabis topicals to $0.‍0025 per milligram of total tetrahydrocannabinol contained in the cannabis product.
Part 4 enacts and amends several Acts in order to implement various measures.
Subdivision A of Division 1 of Part 4 amends the Bank Act to, among other things, provide members of federal credit unions with different methods of voting prior to meetings and provide additional exceptions to the requirement that a proxy circular be sent in order to solicit proxies. The Subdivision also makes a technical amendment to An Act to amend certain Acts in relation to financial institutions.
Subdivision B of Division 1 of Part 4 amends the Canadian Payments Act to allow the term of the elected directors of the Board of Directors of the Canadian Payments Association to be renewed twice, to extend the term of the Chairperson and Deputy Chairperson of that Board and to allow the remuneration of certain members of the Stakeholder Advisory Council.
Subdivision A of Division 2 of Part 4 amends the Canada Business Corporations Act to require a corporation, on request by an investigative body that has reasonable grounds to suspect that certain offences have been committed, to provide to the investigative body a copy of its register of individuals with significant control or information in that registry that is specified by the investigative body. It also requires those investigative bodies to keep certain records in relation to their requests and to report annually in respect of those requests.
Subdivision B of Division 2 of Part 4 amends the Criminal Code to add the element of recklessness to the offence of laundering proceeds of crime.
Subdivision C of Division 2 of Part 4 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things,
(a) allow the Governor in Council to make regulations defining “virtual currency” and “dealing in virtual currencies”;
(b) require the Financial Transactions and Reports Analysis Centre of Canada (“the Centre”) to disclose information to the Agence du Revenu du Québec and the Competition Bureau in certain circumstances;
(c) allow the Centre to disclose additional designated information that is associated with the import and export of currency and monetary instruments;
(d) provide that certain information must not be the subject of a confidentiality order made in the course of an appeal to the Federal Court; and
(e) require the Centre to make public certain information if a person or entity is deemed to have committed a violation or is served a notice of a decision of the Director indicating that a person or entity has committed a violation.
Subdivision D of Division 2 of Part 4 amends the Seized Property Management Act to authorize the Minister to, among other things,
(a) provide consultative and other services to any person employed in the federal public administration or by a provincial or municipal authority in relation to the seizure, restraint, custody, management, forfeiture or disposal of certain property;
(b) manage property seized, restrained or forfeited under any Act of Parliament or of the legislature of a province; and
(c) dispose of property when it is forfeited to Her Majesty in right of Canada and, with the consent of the government of the province, when it is forfeited to Her Majesty in right of a province, and share the proceeds.
The Subdivision also makes consequential amendments to the Criminal Code, the Crimes Against Humanity and War Crimes Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Division 3 of Part 4 amends the Employment Equity Act to require federally regulated private-sector employers to report salary information that supports employment equity reporting beyond salary ranges, including making wage gap information by occupational groups more evident.
Division 4 of Part 4 authorizes payments to be made out of the Consolidated Revenue Fund for climate action support and in relation to infrastructure as well as to the Federation of Canadian Municipalities and to the Shock Trauma Air Rescue Service.
Division 5 of Part 4 amends the Bankruptcy and Insolvency Act to, among other things,
(a) require all parties in a proceeding under the Act to act in good faith; and
(b) allow the court to inquire into certain payments made to, among other persons, directors or officers of a corporation in the year preceding insolvency and imposes liability on the directors for those payments.
The Division amends the Companies’ Creditors Arrangement Act to, among other things,
(a) limit the relief provided in an order made under section 11 to what is reasonably necessary and limit the period staying all proceedings that might be taken in respect of the company to 10 days;
(b) allow the court to make an order to disclose an economic interest in respect of a debtor company; and
(c) require all parties in a proceeding under the Act to act in good faith.
The Division also amends the Canada Business Corporations Act to, among other things,
(a) set out factors that directors and officers of a corporation may consider when acting with a view to the best interests of that corporation; and
(b) require directors of certain corporations to disclose certain information to shareholders respecting diversity, well-being and remuneration.
Finally, the Division amends the Pension Benefits Standards Act, 1985 to clarify that a pension plan is not to provide that, among other things, a member’s pension benefit or entitlement to a pension benefit is affected when a plan terminates. It also authorizes a pension plan administrator to purchase an immediate or deferred life annuity for former members or survivors in order to satisfy an obligation under the plan to provide a pension benefit arising from a defined benefit provision.
Division 6 of Part 4 amends the Canada Pension Plan to authorize the Minister of Employment and Social Development to waive the requirement for an application for a retirement pension in certain cases.
Division 7 of Part 4 amends the Old Age Security Act to provide, starting in July 2020, a new income exemption for the purposes of calculating the Guaranteed Income Supplement. The new exemption excludes the first $5,000 of a person’s employment and self-employment income as well as 50% of their employment and self-employment income greater than $5,000 but not exceeding $15,000.
Division 8 of Part 4 amends the Canadian Forces Superannuation Act, the Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act to increase the surplus limit that applies to the Canadian Forces Pension Fund, the Public Service Pension Fund and the Royal Canadian Mounted Police Pension Fund, respectively, to 25% of the amount of liabilities.
Subdivision A of Division 9 of Part 4 amends the Bankruptcy and Insolvency Act to permit trustee licensing fees to be paid on a date to be prescribed by regulation and to permit trustees to maintain electronic records instead of retaining original documents.
Subdivision B of Division 9 of Part 4 amends the Electricity and Gas Inspection Act to allow for the addition, by regulation, of units of measurement for electricity and gas sales and distribution.
Subdivision C of Division 9 of Part 4 amends the Food and Drugs Act to improve safety and enable innovation by introducing measures to, among other things,
(a) allow the Minister of Health to classify certain products exclusively as foods, drugs, cosmetics or devices;
(b) provide oversight over the conduct of clinical trials for drugs, devices and certain foods for special dietary purposes;
(c) provide a regulatory framework for advanced therapeutic products; and
(d) modernize inspection powers.
Subdivision D of Division 9 of Part 4 amends the Importation of Intoxicating Liquors Act to limit the application of the Act to intoxicating liquors imported into Canada.
Subdivision E of Division 9 of Part 4 amends the Precious Metals Marking Act to provide that exemptions made by regulation can be either conditional or unconditional.
Subdivision F of Division 9 of Part 4 amends the Textile Labelling Act to provide that exemptions made by regulation can be either conditional or unconditional.
Subdivision G of Division 9 of Part 4 amends the Weights and Measures Act to authorize, by regulation, the use of new units of measurement and to update the definitions of the basic units of measurement in accordance with international standards.
Subdivision H of Division 9 of Part 4 amends the Hazardous Materials Information Review Act to streamline the process for reviewing claims for exemption, to allow for the suspension and cancellation of exemptions and to harmonize the provisions of the Act that allow for the disclosure of confidential business information with similar provisions in other Department of Health Acts.
Subdivision I of Division 9 of Part 4 amends the Canada Transportation Act to authorize the electronic administration and enforcement of Acts under the Minister of Transport’s authority and to promote innovation in transportation by authorizing the granting of exemptions for the purpose of research, development and testing.
Subdivision J of Division 9 of Part 4 amends the Pest Control Products Act to, among other things, allow the Minister of Health to
(a) expand the scope of a re-evaluation of, or a special review in relation to, a pest control product rather than initiating a new special review; and
(b) decide not to initiate a special review if the aspect of a pest control product that would otherwise prompt such a review is being, or has been, addressed in a re-evaluation or another special review.
Subdivision K of Division 9 of Part 4 repeals the provisions of the Quarantine Act that relate to the laying of proposed regulations before Parliament.
Subdivision L of Division 9 of Part 4 repeals the provisions of the Human Pathogens and Toxins Act that relate to the laying of proposed regulations before Parliament.
Division 10 of Part 4 amends the Royal Canadian Mounted Police Act to establish the Management Advisory Board, which is to provide advice to the Commissioner of the Royal Canadian Mounted Police on the administration and management of that police force.
Division 11 of Part 4 amends the Pilotage Act to, among other things,
(a) set out a clear purpose and principles for that Act;
(b) transfer the responsibility for making regulations from the Pilotage Authorities, with the approval of the Governor in Council, to the Governor in Council, on the recommendation of the Minister of Transport;
(c) transfer responsibility for enforcing that Act and issuing and charging for licences and certificates from the Pilotage Authorities to the Minister of Transport;
(d) set out an enforcement regime that is consistent with other Department of Transport Acts;
(e) provide that regulatory matters for the safe provision of compulsory pilotage services not be addressed in service contracts between the Pilotage Authorities and pilot corporations;
(f) allow the Pilotage Authorities to impose charges other than by making regulations;
(g) require that service contracts between pilot corporations and the Pilotage Authorities be publicly available; and
(h) prohibit pilots, or users or suppliers of pilotage services, from sitting on the board of directors of a Pilotage Authority.
The Division also makes consequential amendments to the Arctic Waters Pollution Prevention Act and the Transportation Appeal Tribunal of Canada Act.
Division 12 of Part 4 enacts the Security Screening Services Commercialization Act. That Act, among other things,
(a) authorizes the Governor in Council to designate a body corporate incorporated under the Canada Not-for-profit Corporations Act as the designated screening authority, which is to be solely responsible for providing aviation security screening services;
(b) authorizes the Canadian Air Transport Security Authority to sell or otherwise dispose of its assets and liabilities to the designated screening authority;
(c) regulates the establishment, imposition and collection of charges related to the provision of aviation security screening services; and
(d) provides for the dissolution of the Canadian Air Transport Security Authority.
The Division also makes consequential amendments to other Acts.
Division 13 of Part 4 amends the Aviation Industry Indemnity Act to authorize the Minister of Transport to undertake to indemnify
(a) NAV CANADA for acts or omissions it commits in accordance with an instruction given under an agreement entered into between NAV CANADA and Her Majesty respecting the provision of air navigation services to the Department of National Defence; and
(b) any beneficiary under an insurance policy held by an aviation industry participant.
Division 14 of Part 4 amends the Transportation Appeal Tribunal of Canada Act to clarify that the Transportation Appeal Tribunal of Canada has jurisdiction in respect of reviews and appeals in connection with administrative monetary penalties provided for under the Marine Liability Act.
Division 15 of Part 4 enacts the College of Immigration and Citizenship Consultants Act. That Act creates a new self-regulatory regime governing immigration and citizenship consultants. It provides that the purpose of the College of Immigration and Citizenship Consultants is to regulate immigration and citizenship consultants in the public interest and protect the public. That Act, among other things,
(a) creates a licensing regime for immigration and citizenship consultants and requires that licensees comply with a code of professional conduct, initially established by the responsible Minister;
(b) authorizes the College’s Complaints Committee to conduct investigations into a licensee’s conduct and activities;
(c) authorizes the College’s Discipline Committee to take or require action if it determines that a licensee has committed professional misconduct or was incompetent;
(d) prohibits persons who are not licensees from using certain titles and representing themselves to be licensees and provides that the College may seek an injunction for the contravention of those prohibitions;
(e) provides the responsible Minister with the authority to determine the number of directors on the board of directors and to require the Board to do anything that is advisable to carry out the purposes of that Act; and
(f) contains transitional provisions allowing the existing regulator — the Immigration Consultants of Canada Regulatory Council — to be continued as the College of Immigration and Citizenship Consultants or, if the existing regulator is not continued, allowing the establishment of the College of Immigration and Citizenship Consultants, a new corporation without share capital.
The Division also makes related amendments to the Citizenship Act and the Immigration and Refugee Protection Act to double the existing maximum fines applicable to the offence of contravening section 21.‍1 of the Citizenship Act or section 91 of the Immigration and Refugee Protection Act.
In addition, it amends those Acts to provide the authority to make regulations establishing a system of administrative penalties and consequences, including of administrative monetary penalties, applicable to certain violations by persons who provide representation or advice for consideration — or offer to do so — in immigration or citizenship matters.
Finally, the Division makes consequential amendments to the Access to Information Act and the Privacy Act.
Division 16 of Part 4 amends the Immigration and Refugee Protection Act to
(a) introduce a new ground of ineligibility for refugee protection if a claimant has previously made a claim for refugee protection in another country;
(b) provide that if the Federal Court refuses a person’s application for leave to commence an application for judicial review, or denies their application for judicial review, with respect to their claim for refugee protection or their application for protection, the date of that refusal or denial is the first day of the period that must pass before a request or application referred to in section 24, 25 or 112 of that Act may be made; and
(c) authorize the Governor in Council to make an order regarding the processing of applications for temporary resident visas, work permits and study permits made by citizens or nationals of a foreign state or territory if the Governor in Council is of the opinion that the government or competent authority of that state or territory is unreasonably refusing to issue or unreasonably delaying the issuance of travel documents to citizens or nationals of that state or territory who are in Canada.
Division 17 of Part 4 amends the Federal Courts Act to increase the number of Federal Court judges.
Division 18 of Part 4 amends the National Housing Act to allow the Canada Mortgage and Housing Corporation to acquire an interest or right in a housing project that is occupied or intended to be occupied by the owner of the project and to make an investment in order to acquire such an interest or right.
Division 19 of Part 4 enacts the National Housing Strategy Act. That Act provides for, among other things, the development and maintenance of a national housing strategy and imposes requirements related to the mandatory content of the strategy. It also establishes a National Housing Council and requires the appointment of a Federal Housing Advocate. Finally, it requires the submission of an annual report by the Advocate on systemic housing issues and the submission of periodic reports by the designated Minister on the implementation of the strategy and the achievement of desired housing outcomes.
Division 20 of Part 4 enacts the Poverty Reduction Act, which provides for an official metric and other metrics to measure the level of poverty in Canada, sets out two poverty reduction targets in Canada and establishes the National Advisory Council on Poverty.
Division 21 of Part 4 amends the Veterans Well-being Act to expand the eligibility criteria for the education and training benefit in order to make members of the Supplementary Reserve eligible for that benefit.
Division 22 of Part 4 amends the Canada Student Loans Act and the Canada Student Financial Assistance Act to extend the interest-free period on student loans by six months and to provide for transitional measures in respect of individuals to whom student loans were made and who ceased to be students at any time during the six months before the amendments come into force.
Division 23 of Part 4 amends the Canada National Parks Act to establish Thaidene Nene National Park Reserve of Canada and to decrease the hectarage of certain ski areas.
Division 24 of Part 4 amends the Parks Canada Agency Act to provide that, starting on April 1, 2021, any balance of money appropriated to the Parks Canada Agency that is not spent by the Agency in the fiscal year in which it was appropriated lapses at the end of that fiscal year.
Subdivision A of Division 25 of Part 4 enacts the Department of Indigenous Services Act, which establishes the Department of Indigenous Services and confers on the Minister of Indigenous Services various responsibilities relating to the provision of services to Indigenous individuals eligible to receive those services.
Subdivision B of Division 25 of Part 4 enacts the Department of Crown-Indigenous Relations and Northern Affairs Act, which establishes the Department of Crown-Indigenous Relations and Northern Affairs, confers on the Minister of Crown-Indigenous Relations various responsibilities relating to relations with Indigenous peoples and confers on the Minister of Northern Affairs various responsibilities relating to the administration of Northern affairs.
Subdivision C of Division 25 of Part 4 makes amendments to other Acts and repeals the Department of Indian Affairs and Northern Development Act.
Subdivision D of Division 25 of Part 4 makes amendments to the First Nations Land Management Act, the First Nations Oil and Gas and Moneys Management Act and the Addition of Lands to Reserves and Reserve Creation Act.
Division 26 of Part 4 enacts the Federal Prompt Payment for Construction Work Act in order to establish a regime to provide prompt payments to contractors and subcontractors for construction work performed for the purposes of a construction project in respect of federal real property or federal immovables and a regime to resolve disputes over the non-payment of that construction work.

[The Chair, Liberal, Wayne Easter]

We'll reconvene.

As everyone knows, we're dealing with the budget implementation act, or Bill C-97, and witnesses related to that subject.

Welcome to the witnesses. I believe we have six separate presentations on this panel, so if you could, please hold your presentations to about five minutes.

We'll start with the Canadian Construction Association. Mary Van Buren is the president.

Welcome, Mary.

[Jenny Kwan, NDP, Vancouver East, BC]

I'm moving this to say that perhaps this should come from the clerk's office and be sent to the finance committee so that they have this information and all the finance committee members would be aware of it.

We're in the public session, so I'm not talking about the letter, Mr. Chair, because that would be in violation of the rules to talk about the letter in a public session. What I'm talking about is that the documents we received from the public on this topic would be shared with the finance committee to clearly indicate that our committee has received 2,280 emails pertaining to the changes to Bill C-97 on the asylum determination process, indicating their call for the government to reject these amendments.

In my view, Mr. Chair, that should be a communication from the clerk's office to the finance committee on our behalf.

[Andrew Booth, Chief Commercial Officer, STEMCELL Technologies]

Good afternoon, Mr. Chairman and members of the committee.

My name is Andrew Booth and I'm the chief commercial officer at STEMCELL Technologies. I appreciate the invitation to address you here today.

STEMCELL is Canada's largest biotech company. We have over 1,400 employees worldwide, with over 1,000 in our headquarters in Vancouver. Our catalogue of over 3,000 products is used by research scientists, universities and pharmaceutical companies around the world, enabling life sciences research.

Business has been good. Fiscal 2018 revenues were approximately $200 million and we hired over 350 people. We're on track to increase revenues another 25% in this fiscal year. We added over 125 employees in the last quarter alone. We have 90 open positions today and a plan to hire over 3,000 more people in the coming 10 years. We're a proudly diverse, proudly high tech and also proudly Canadian company.

In short, when the Minister of Innovation, Science and Economic Development, Navdeep Bains, talks about building Canadian anchor companies, he's talking about companies like ours. Indeed, Minister Bains has visited our facility in Vancouver, as have Minister Champagne, Minister Sajjan, MPs Terry Beech and Pamela Goldsmith-Jones, as well as MPs Michael Chong and Erin O'Toole. I believe all would agree that STEMCELL is a role model Canadian company that is succeeding globally.

We are, in large part, believers of the government's innovation agenda. That said, there are still disconnects between the stated goals and the means taken to achieve them. Bill C-97 is a case in point. Specifically, we would like to bring your attention to the changes that the bill recommends to the scientific research and economic development tax credits, or SR and ED. We believe it was an excellent decision to remove the so-called profit cap on the enhanced SR and ED credits and associated refundable portion of the SR and ED system. It should help self-funded companies grow without undue investor pressure to exit at an early stage. This may, in turn, result in fewer companies moving intellectual property and corporate headquarters outside of Canada.

Unfortunately, the government has missed an opportunity in failing to also address SR and ED's taxable capital measurement. It is our view that this was a mistake. The taxable capital measurement reflects a “small is beautiful” approach to innovation, which does not align well with the government's stated goals to grow and keep world-leading tech firms here in Canada. It also tilts the playing field away from companies that have larger capital investments in things like manufacturing, infrastructure and test equipment. These companies are inherently stickier and more likely to endure in Canada over time.

We would propose replacing the taxable capital cap with a sliding scale where a 1% enhanced SR and ED credit is granted to companies that reinvest half a per cent of their gross revenues into SR and ED-eligible research and development. This enhanced credit would be capped at a maximum of 20% above the base rate for those companies that invest 10% of revenues or more into R and D.

As small and medium-sized enterprises generally reinvest higher proportions of available revenues in R and D, the government could continue to encourage the start-up community without reducing incentives for larger firms, which continue to invest and grow into anchor companies. At STEMCELL alone, we would estimate that this change would result in the immediate hiring of 20 to 25 research scientists.

By making slight adjustments to the technical nuts and bolts of the policy, the federal government can better support Canadian tech companies of all sizes. This will help develop and maintain not only economic value and jobs in this country, but also the sort of intellectual property portfolios that will be the true engines of the economy in the 21st century.

Once again, I thank you for your time and I look forward to taking any questions.

[Jenny Kwan, NDP, Vancouver East, BC]

Thank you very much, Mr. Chair.

I wanted to check with the clerk's office through you, Mr. Chair. I've received 2,280 emails from the Canadian public with respect to Bill C-97 on the changes to the Immigration refugee asylum processing system. I believe this letter was sent to all of us at committee. As the vice-chair of the committee, I received them.

I just wanted to make sure that these documents are in fact a part of the reporting out in our process here and on the public record. We should also ensure that the finance committee is advised of this information. I just want to make sure that this in fact is a process that we would follow.

[Kevin Lee, Chief Executive Officer, Canadian Home Builders' Association]

Thank you, Chair.

CHBA represents some 9,000 member companies from coast to coast and is the national voice of the residential construction sector.

BILD Alberta is the constituent association of CHBA, and as Carmen has spoken to the specifics of Alberta, I'll speak to the housing issues on a national basis that are found in Bill C-97.

From a guiding principles level, CHBA has one key amendment to recommend to the committee regarding the bill. Our recommendation relates directly to the issue of housing affordability, a top-of-mind issue for Canadians from coast to coast.

As all of you know, an ability to access home ownership affects constituents in all of your respective ridings, especially young and new Canadians who aspire to realize the dream of home ownership. Deteriorating market rate affordability also has severe impacts on housing initiatives for those in core housing need.

We therefore propose that the second paragraph of the preamble of the national housing strategy act be amended from the current wording, which reads, “Whereas access to affordable housing contributes to achieving beneficial social, economic, health and environmental outcomes”, and be adjusted to capture the full housing continuum, including market rate housing, as follows: “Whereas both housing affordability and access to affordable housing by those in need contributes to achieving beneficial social, economic, health and environmental outcomes”.

We feel that this amendment would better capture the true housing challenges facing Canadians, preventing a focus solely on social housing and instead also including addressing housing affordability for those seeking to join the middle class and home ownership.

Indeed, without addressing housing affordability, Canada's social housing challenges will get worse. The inability of renters to access home ownership is clogging up the housing continuum, limiting rental unit availability, driving up rents and causing more challenges for those in housing need as well as those organizations seeking to provide it.

For the national housing strategy to be complete, it must also address market-rate housing affordability, especially for first-time buyers. This is particularly true, given the affordability challenges now facing millennials and new Canadians. The strategy and government actions should address the issues driving up costs; smart mortgage rules that address risks, without locking too many Canadians that have home ownership; market rate housing supply; transit-oriented development and more.

Regarding smart mortgage rules, CHBA advises that the compounding effect of many more mortgage rule changes have now gone too far. We are seeing those effects in job losses, weakening economies and the financial challenges now facing millennials.

The proposed first-time homebuyer incentive is a potentially effective measure to expand both affordability and market accessibility for some, particularly those stuck perpetually in rental markets. CHBA has provided CMHC with our initial design recommendations accordingly.

The problem is that this incentive will not be in place until the fall at the earliest, leaving many markets with severe challenges this construction season, including having some buyers delay their purchases until the incentive is available. As well, even once in place, the incentive will still leave thousands of prospective and well-qualified first-time buyers on the sidelines because of the excessively stringent mortgage rules still in place, the impacts of which remain to play out.

We therefore continue to recommend two key additional steps to unlock the door to home ownership right now: adjust the stress test to reflect current economic conditions and restore 30-year amortization on insured mortgages for well-qualified first-time buyers seeking entry-level homes.

The stress test has excessively suppressed the market. Between it and rising interest rates, CHBA estimates that 147,000 potential buyers have been knocked out of the market since it was introduced.

As well, while some suggest the impact of the stress test is now fading, our data tells us differently. The Bank of Canada's most recent forecast shows a 0.3% decline in Canada's GDP for 2019 directly associated with housing activity, amounting to a drop of about $6.7 billion. What is worrisome is that this is the fourth downward revision recently by the bank, based on greater than expected declining housing trends that were not anticipated by the bank's model previously. Our data confirms this and points to the continuing slide caused by the compounding mortgage rule changes.

Since the beginning of 2019, we have surveyed members on two occasions on the effects of the stress test. In January, our members reported a 33% drop in first-time homebuyer activity this past year. This drop in buyers has yet to fully play out in terms of housing starts. The second survey in April revealed that some 65% of the 300 CHBA member companies responding have already laid off staff, and 40% expect to lay off more workers in the next few months, this at a time when the government recognizes that we need more, not less, housing supply.

Our recommendations to adjust the stress test and restore 30-year insured mortgages for first-time buyers, which, like the incentive program, could even have an income-to-price ceiling, would get the continuum and industry functioning properly again, without increasing risk excessively.

In short, it's time for the national housing strategy to address not only those in core housing need but the housing aspirations of hundreds of thousands of well-qualified buyers currently locked out of the market. This affects not only their financial prospects but those of local economies and jobs across Canada.

Thank you. I would be happy to answer questions afterwards.

[The Chair, Liberal, Wayne Easter]

I'll call the meeting to order.

For the record, pursuant to the order of reference of Tuesday, April 30, 2019, we're examining Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures.

Welcome to all the witnesses. We have seven on this panel. If you could hold it as tight as possible to five minutes, that would be dandy.

We'll start with Ms. Wyton, from the BILD Alberta Association.

Are you ready to go?

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

We're trying to reassure the public by saying that we'll copy the existing process, when we could simply keep the status quo.

Ms. Biss, I have one question about poverty reduction and another about housing.

Two new pieces of legislation are expected, of course. However, unfortunately, they're totally unambitious. They're a mistake on the part of the minister, especially since, as you said, there was a substantial response to the first poverty reduction bill introduced. Over 500 organizations had written letters recommending improvements, but these letters were totally ignored by the parliamentary secretary. Bill C-97 proposes a copy and paste of the legislation, when we could have responded to the recommendations and improved it.

One recommendation provided by some groups, including the Collectif pour un Québec sans pauvreté last week, was to change the proposed poverty line measure, which is currently the market basket measure. Is that your position as well? If so, for what other measure would you change the market basket measure? If not, would the idea simply be to improve transparency with respect to Statistics Canada's publication of the poverty line, the market basket measure and its composition, and give the agency all the independence needed to establish this measure?

[Dr. Jack Mintz, President's Fellow, School of Public Policy, University of Calgary, As an Individual]

Thank you very much, Mr. Chairman. This is a real smorgasbord of different topics, but I guess that's what you'd expect with an omnibus bill like Bill C-97.

Thank you very much for your invitation to speak about Bill C-97, an act to implement certain provisions related to the budget. I will specifically comment on the tax provisions.

To begin, a number of measures introduced in the budget are appropriate from the point of view of addressing some specific problem areas of the tax structure, and I won't go into those. Some are initiatives that I want to applaud, particularly the tax credit to assist Canadians with training costs.

In this day and age, with rapidly evolving technologies, some of them disruptive to specific sectors of the labour market, a focus on training is helpful to address. The good thing about a tax credit such as this, or at least some help in some form, which could be a grant instead of a tax credit, is that it nudges people to think about saving for training costs. Of course, it's going to have to be carefully monitored and carefully put into place because there could be a lot of wastage involved with that if one's not careful.

However, what I wish to discuss is the plethora of new credits, accelerated cost reductions and other forms of targeted assistance in this and previous budgets. I have seen that more harm than good is done with a tax system increasingly looking like Swiss cheese. In particular, tax preferences for investments in manufacturing, clean technologies, mineral exploration and the purchase of housing and electric vehicles in this budget, added to past preferences, raise several well-known issues about the effectiveness of these various policies.

First, governments trying to pick winners often end up supporting losers. By favouring some activities over others, the allocation of resources in the economy is distorted, resulting in lower incomes and productivity.

Second, targeted incentives might generate some additional activity, but they also reward activities that were already planned. This undermines the cost effectiveness of the incentive, and in many cases leads to little new activity.

Third, incentives can only be used if the household or business is paying taxes. If taxpayers cannot use the credit, it is often of little value unless the credit is made refundable, enabling the taxpayer to effectively receive a grant. An important question, though, is whether it is better to provide subsidies as grants or refundable tax credits. There's a long discussion about the advantages and disadvantages of grants versus credits.

Fourth, tax credits, accelerated depreciation and other tax preferences push some companies and higher-income individuals into positions whereby they are no longer paying taxes. Taxpayers look to shift their deductions or credits to others through complicated planning procedures. Governments then try to stop so-called loopholes that are caused by their own policies. The tax systems become increasingly unstable with new limitations and minimum taxes introduced to claw back the incentives.

Fifth, targeted incentives to producers also cause great demand for tax-assisted goods and services, blunting the incentives as prices or input costs rise. In other words, the tax incentives might look politically good but basically make the suppliers of the products richer without encouraging the activity they were intended to support.

My favourite example of that was the Quebec tax holiday for a few buildings in Montreal that effectively just led to higher rents in the buildings as opposed to really helping startup businesses. In fact, it led to a lot of angry landlords in other buildings that didn't get the same incentive.

Sixth, someone has to pay for the tax incentives, today's taxpayers or future taxpayers, as a result of higher deficits.

In my careers, I participated in two business tax reforms—the Honourable Michael Wilson's budget in May 1985 and the Right Honourable Paul Martin's business tax reform panel in 1996 and 1997. Both reforms had to deal with a non-competitive tax system in which tax rates became too high, discouraging successful activities. Past policies that led to the introduction of numerous tax incentives undermined the tax system, which eventually led to the only sensible reform of reducing tax rates and removing incentives.

Did the reforms help the economy? I would suggest that has been the case based on various economic studies.

Many of you might have read my critical comments on the adoption of accelerated depreciation in November 2018 and contained in Bill C-97. I believe it was a policy error for the reasons given above. As Philip and I have shown in a recent Canadian Tax Journal article—which I sent to you for members to look at if they wish—the introduction of temporary accelerated depreciation was biased toward machinery investments in certain industries, thereby almost tripling economic distortions.

Bonus depreciation in the U.S., or accelerated depreciation of machinery, has been placed in the United States since 2001 without significant consequence to Canada. A recent study has shown that the policy undermined U.S. growth and, interestingly, increased economic inequality by favouring skilled workers, who benefited most. The same will be true with this budget policy.

Even worse, the accelerated depreciation provisions fail to address the effect of U.S. tax reform that will erode certain business activities and public revenues in Canada. The business tax reform with competitive corporate income tax rates in the United States will attract not just more tangible investment to the United States from Canada but also intangible income and profits. Canada needs a corporate tax reform to protect our tax base and encourage companies to keep profits in Canada. A reduction in corporate income tax rates would also help counter the competitiveness effects of U.S. reform without mucking up our own tax system.

In other words, we should have approached this with a mini-type of corporate tax reform, which by the way, is being pursued by 12 other countries in the world at this point. In fact, Canada sticks out as the only country that responded to U.S. reform with accelerated depreciation. Congratulations, you are unique, at least.

The key point is that we need to get back to the basics of running a good tax system that is efficient, simple and fair. We are straying away from these principles in recent years, which we will regret in the future.

[Leilani Farha, United Nations Special Rapporteur on the Right to Housing, As an Individual]

Good afternoon and thank you.

I am Leilani Farha, the United Nations Special Rapporteur on the Right to Housing. I was appointed to this position by the UN Human Rights Council in 2014. In this capacity, my role is to monitor and assess the enjoyment and implementation of the right to housing in countries around the world. I often provide technical assistance to governments with respect to the drafting and implementation of law and policy related to the right to housing. I have done so in Egypt, France, Chile, India, Spain and Ireland, among many other countries and cities.

I thank the committee for providing me with an opportunity to appear before you. My comments today will be brief and will focus on the proposed national housing strategy act. I have been in conversation with Minister Duclos' office, with Parliamentary Secretary Adam Vaughan, as well as with CMHC to some degree as this legislation has taken shape.

Let me tell you a little about my history with this legislation.

In May 2017, I issued a formal communication, called an “allegation letter”, to the Government of Canada expressing my concerns regarding the alarming rates of homelessness in this country, which I note persist today, as well as the lack of a national housing strategy based in human rights. Subsequently, in November 2017, the government responded by introducing its rights-based national housing strategy.

In July 2018, I was compelled to write a follow-up letter to the Government of Canada expressing my concern regarding two matters: first, that while a rights-based national housing strategy had been adopted, the government appeared to be reluctant to recognize the right to housing in legislation; and second, the government appeared to be reluctant to ensure access to effective remedies through which rights holders could hold the government accountable to the obligation to progressively realize the right to housing. I indicated at that time that this would put the Government of Canada at odds with its international human rights obligations.

In April of this year, the government wrote to assure me that my concerns were being addressed through Bill C-97.

Unfortunately, in its current form, Bill C-97 does not fully address my concerns. In my opinion, amendments are required.

The proposed national housing strategy act would make a policy commitment to the progressive realization of the right to housing consistent with the International Covenant on Economic, Social and Cultural Rights. It would create an independent housing advocate supported by the Canadian Human Rights Commission. It would establish a national housing council with the explicit inclusion of people with lived experience of homelessness and inadequate housing, and it would commit to ensuring participation of affected communities. These developments are very positive and I commend their inclusion in the NHSA, but more needs to be done if Canada wants to comply with its international human rights obligations and become a model for other governments.

I understand that last week representatives from civil society provided you with an overview of amendments to the act that would be required to bring Canada in compliance with its international human rights obligations. I concur with those submissions and I reiterate them as follows.

First, the NHSA must include a clear articulation that housing is a fundamental human right.

Second, the government's implementation of the progressive realization of the right to housing must be monitored. The housing council could play a role in that regard.

Third, the housing advocate must be able to receive and investigate petitions that identify systemic housing rights issues and make specific recommendations to which the minister, Minister Duclos in this instance, and the future minister, must respond.

Fourth, the legislation must establish a procedure for the housing advocate to refer important systemic housing rights issues to public hearings before a panel, ensuring affected groups have a voice. The panel's recommendations must be considered by the minister.

These proposed amendments are by no means the high-water mark of the right to housing. Other jurisdictions offer more protections and accountability. However, these amendments are creative and responsive to the Canadian context and consistent with Canada's human rights obligations.

There is no reason to be fearful of legislation that embraces Canada's human rights obligations. It is now well understood internationally that alongside climate change, housing is the key issue of our times. The world is experiencing a housing crisis, and Canada is in the thick of it. One need only walk down the streets of Toronto, Vancouver or even Ottawa to know it. It is now well-established that only an approach based in human rights will achieve the housing outcomes I know this government is keen to reach.

I hope that amendments such as those proposed in my submissions and those of others last week will be tabled and adopted by this committee and that I might be able to share Canada's achievement on the world stage.

Thank you, and I'm happy to take any questions.

[Vance Badawey, Liberal, Niagara Centre, ON]

Madam Chair, I have a motion here, if I may.

As this is our last scheduled meeting on the BIA, I would like to suggest that the committee send a letter in response to FINA.

As for the committee's perspective, I propose that you, as chair, simply thank the finance committee for the opportunity to look at divisions 11 and 12 of Bill C-97, inform its members of the hearings we had on this matter and advise that the committee as a whole does not have any recommendations or amendments to propose.

I would also like to remind all members that, if they have any amendments, they can submit them directly to FINA before the established deadline of Friday, May 17, 2019.

Thank you, Madam Chair.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order again dealing with Bill C-97, the budget implementation act. We have a number of witnesses. We'll start off with Canada Without Poverty, with Ms. Biss, Policy Director and Human Rights Lawyer.

Welcome, Ms. Biss. Go ahead.

[The Chair, Liberal, Judy Sgro]

Turning to Bill C-97, we have some amendments proposed by Ms. Block and Mr. Aubin. I suggest we start with the first one, with Ms. Block.

Ms. Block, would you like to speak to your proposed amendment?

[Dennis Prouse]

You referenced that external advisory committee on regulatory competitiveness. I saw that they were appointed and that, in fact, there was an agriculture leader placed on that committee. We thought that was a really positive development.

There has been some good progress. It started with Barton, went to the agri-food economic strategy table, went to the fall economic statement and went to the budget. Of course, now we're going to come up on this little thing called an election, and as parties go out on the campaign trail and as they write their platforms, the one message is this: Please don't forget about regulatory modernization and please don't forget about agriculture growth.

To your point, we're on the precipice of some really positive developments, and I came here to support Bill C-97 because there were some positive developments. However, now there will to be a campaign and I'm hoping that momentum can continue so that we don't have to start all over again once we all land back here in November.

That would be my message.

[Prof. Audrey Macklin]

I will focus on two aspects of Bill C-97 touching on immigration.

The first, starting at clause 305 of Bill C-97 is the diversion of a subset of refugee claimants from the Immigration and Refugee Board's refugee determination process to a pre-removal risk assessment. This applies to those who have made a refugee claim in one of the Five Eyes countries before coming to Canada, and that country is by and large the United States.

Why is this happening and with what effect? It's important to know that the pre-removal risk assessment is designed to be a supplement to, not a substitute for, a proper refugee determination. A proper refugee determination provides an oral hearing before an independent expert decision-maker. The pre-removal risk assessment is conducted by an employee of Immigration, Refugees and Citizenship Canada—someone who is not independent, someone who is not an expert in refugee determination and does not routinely provide oral hearings.

Why would one make this change from a process designed for refugee determination to one that is intended only as a supplement—one that is, for purposes of refugee determination, clearly inferior? Two reasons have been proffered. One is to address the delays, backlog and inefficiencies arising from the growth in the flow of incoming refugee claimants entering the system.

With respect to this problem, legal scholars—me included—and lawmakers, when confronted with a policy challenge, often reach first to law as the solution. The problem of a law is it's a bad law, and if it's a bad law, we'll make a better law. But that's often not the case and it's not the case here. The problem for the Immigration and Refugee Board was the inadequacy of the resources it had to manage an increasing flow of refugee claimants and, candidly, a lack of nimbleness in responding to the challenges of doing its job. These were amply documented in a recent audit report about the refugee determination process.

Having said that, since the data was gathered for that report, the Immigration and Refugee Board has received increased resources from the federal government, to the government's credit, and the IRB itself has developed new and better techniques for managing its workload, so that at present, they have exceeded their performance target for fiscal year 2019. In other words, there was a policy challenge, it was operational and administrative and they're meeting it.

For the government to switch horses in the middle and start to divert claims to another process, I think, is operationally unwise. More importantly, or in addition to that, this new process, or PRRA—pre-removal risk assessment process—is not able at the moment to manage refugee determination. It doesn't do oral hearings. It doesn't have expert decision-makers. There has been no calculation of the additional resources, delays and costs that will be imposed by switching to a different process for that subset of claims. In short, I think it is an inappropriate policy response to an operational or administrative challenge, and one that, indeed, on the evidence, is being addressed under the existing system.

I will move on to another concern about this, or another reason this process has been suggested, which is to somehow respond to the increased movement of so-called irregular border crossers who are coming to make asylum claims in Canada. I have a couple of responses to that.

First, the evidence suggests that very few of those people who are crossing irregularly into Canada have made asylum claims in the United States. So if the goal is to somehow address that population, it isn't going to be addressed by this move.

Second, for this allocation of refugee claimants who have made a claim in the United States the pre-removal risk assessment applies not only to irregular border crossers but to people who cross the border in any way—people who fly into Canada or people who enter to make a refugee claim under one of the exceptional categories of the safe third country agreement, for example, if they already have a relative in Canada. In other words, it doesn't just apply to irregular border crossers.

Finally, there seems to be a misconception that people who are diverted to the pre-removal risk assessment process because they have made a refugee claim in the United States will, if they fail before the PRRA, be removed to the United States. That's not right.

Let me give you an example. Let's say there is somebody from Iran in the United States who entered before the Muslim ban—a student, for example. The situation has become dangerous for her to return to Iran, and she decides, perhaps not unreasonably, that the United States is not a safe place for her to make a refugee claim. Maybe she makes a refugee claim in the United States and changes her mind, or maybe she doesn't make one at all. She comes to Canada. She gets this pre-removal risk assessment, which is an inferior process to a refugee determination process and one that will have a higher risk of false negatives, false refusals. If she is refused under this process, she isn't returned to the United States to complete her refugee claim there. She's returned to Iran.

This process exposes people to a very real risk of refoulement—a return to face persecution—and indeed through an unfair, incomplete, inadequate process.

Why, then, is this being done to people who have made refugee claims elsewhere? If it's under the assumption that they should complete their refugee claim in the place they started, as I pointed out, they aren't going to be returned to the place where they started their refugee claim. They're going to be returned to a place where they may fear persecution. If there is a view that somehow people ought not to make a refugee claim in one of the Five Eyes countries and then come to Canada, I will only refer you to the written submission of Professor Karen Musalo, an expert in U.S. immigration and refugee law.

She testified before the citizenship and immigration parliamentary committee on the question of what kind of asylum process now exists in the United States. She provides ample evidence about the extent to which it is unfair in its process, through things like, for example, the detention of children and the separation of families, and how it is unfair in its content and substance, by, for example, denying protection to women who flee domestic violence from other countries and cannot obtain refugee protection.

There has also been some claim that people who undertake this or who are subjected to this pre-removal risk assessment will in fact get a robust oral hearing and full access to appeal. I would refer you to the actual provisions in this legislation, in this bill, clause 305 and onwards. Nowhere in there does it say that anybody will get an oral hearing. Nowhere does it say that they will get an appeal. These are mere promises that are held out as something that may be done in regulation if this legislation is passed. I would encourage you not to sign a blank cheque on this. There is no oral hearing provided in this legislation. There's no provision for appeal under the present pre-removal risk assessment. There is very rarely occasion for oral hearings. They are generally not given.

In the moment that remains, I will just highlight for you something I will not pursue here, which is another provision in the bill regarding visas. There is a provision here to systematically deny visitor visas and other kinds of visas from countries that Canada considers unwilling to furnish adequate travel documents for purposes of removal of those already in Canada.

Let me cut to the chase on that. What this proposes, for example, is that if a country like China, which often does not issue travel documents readily to people being removed from Canada to China.... Canada decides it's not going to give any more travel documents to Chinese visitors to Canada. You as MPs are going to have an office full of angry constituents who say, “My mother can't visit for a wedding because she's from China, and China isn't delivering travel documents for returning Chinese visitors fast enough.” I'm not sure if you want to confront that situation in your constituency offices, but that's what this legislation will permit and authorize.

With that, I welcome your questions. Thank you very much.

[Michael Hatch, Associate Vice-President, Financial Sector Policy, Canadian Credit Union Association]

Thank you, Mr. Chair.

I want to thank the committee members for giving me the opportunity to speak this morning.

My name is Michael Hatch, as the chairman mentioned, and I am the Associate Vice-President for Financial Sector Policy with the Canadian Credit Union Association. Try saying that five times fast.

We represent 248 credit unions and caisses populaires outside of Quebec. Collectively, our sector contributes $6.5 billion to the Canadian economy. We have 5.8 million members. We employ almost 30,000 Canadians and we manage over $225 billion in assets. In 2018 we donated $62.5 million back to community initiatives and projects across the country, which is a much higher share of our after-tax income than the large banks.

Credit unions are owned by the people who bank with them, as many of you will know and appreciate, and that's what sets us apart. We're the only banking services provider with a physical branch in 395 communities across Canada, many of which are represented around this table today.

Despite our smaller size, we have market share comparable to the big five banks in agricultural and small business lending. We lend to small businesses because we are small business. In the western provinces, for example, credit unions often have between 30% and 50% of the market. In Manitoba, one out of every two consumers banks with a credit union.

The important work we do in our communities is why credit unions have been asking the government to modernize some outdated provisions within the Bank Act, which are obsolete and a barrier to innovation and competition in financial services. We were pleased to see two of our pre-budget recommendations included in budget 2019, back on March 22. These were changes to federal credit union member voting for AGMs, and an elimination of the outdated requirement for federal credit unions to send paper statements to all members each year.

We thank the government for hearing our concerns and for working to address some of our recommendations in budget 2019. However, we were disappointed that only one of these two recommendations was included in Bill C-97. This means that federal credit unions will have to continue sending out inefficient, costly and environmentally unfriendly paper statements to all of their members, including children, preventing the credit unions from returning the savings that electronic notices would provide back to their communities, until at least 2020 and perhaps beyond.

One of our federal credit unions has estimated that this costs it nearly $1 million every year. This money would be much better spent on reinvestment in the credit union or on the community programs that our members support so generously.

While the Bank Act does apply directly to only federal credit unions, it is important to note that modernization of outdated provisions eliminates barriers to entry for credit unions considering going federal, as well as sending an important message to provincial regulators, encouraging them to re-examine their own outdated provisions in their own legislation. Several provinces still have similarly outdated provisions. These recommendations will have an impact not only in the federal sphere but across Canada in increasing competitiveness and innovation within the sector.

With the support of the all-party credit union caucus—of which many members are here this morning—and all parties, credit unions remain hopeful that the Parliament elected in October will follow through with the budget measure on the elimination of the requirement to send paper statements, and our other recommendations to support innovation and competition within the financial services sector.

Ultimately, policy should encourage competition in financial services in Canada. Our financial sector is not noted for its high levels of consumer choice. Credit unions represent the only real alternative to the large banks in Canada. Further, policy-driven concentration in financial services in this country is not in the interests of the consumer or the economy.

Credit unions will continue to advocate for the changes that the government committed to in its budget this year but that did not make it into this bill, regardless of the outcome of the election later this year. The sector appreciates the support of the all-party credit union caucus and asks this committee for its support in ensuring that these changes are implemented at the earliest legislative opportunity.

Thank you very much.