Bill C-32

Fall Economic Statement Implementation Act, 2022

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022

Part 1 implements certain measures in respect of the Income Tax Act by
(a) providing that any gain on the disposition of a Canadian housing unit within a one-year period of its acquisition is treated as business income;
(b) introducing a Tax-Free First Home Savings Account;
(c) phasing out flow-through shares for oil, gas and coal activities;
(d) introducing a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors;
(e) introducing the Canada Recovery Dividend under which banks and life insurers’ groups pay a temporary one-time 15% tax on taxable income above $1 billion over five years;
(f) increasing the corporate income tax rate of banks and life insurers’ groups by 1.5% on taxable income above $100 million;
(g) providing additional reporting requirements for trusts;
(h) providing rules applicable to mutual fund trusts listed on a designated stock exchange in Canada with respect to amounts that are allocated to redeeming unitholders;
(i) providing the Minister of National Revenue with the discretion to decline to issue a certificate under section 116 of the Income Tax Act in certain circumstances relating to the administration and enforcement of the Underused Housing Tax Act ;
(j) doubling the First-Time Homebuyers’ Tax Credit;
(k) expanding the eligibility criteria for the Medical Expense Tax Credit in respect of medical expenses incurred in Canada related to surrogate mothers and donors and fees paid in Canada to fertility clinics and donor banks;
(l) introducing the Multigenerational Home Renovation Tax Credit;
(m) allowing access to the small business tax rate on a phased-out basis up to taxable capital of $50 million;
(n) modifying the computation of income as a result of the adoption of a new international accounting standard for insurance contracts;
(o) introducing a new graduated disbursement quota rate for charities;
(p) providing that the general anti-avoidance rules can apply to transactions that affect tax attributes that have not yet been used to reduce taxes;
(q) strengthening the rules on avoidance of tax debts;
(r) modifying the calculation of the taxes applicable to registered investments that hold property that is not a qualified investment;
(s) modifying the tax treatment of certain interest coupon stripping arrangements that might otherwise be used to avoid tax on cross-border interest payments;
(t) clarifying the applicable rules with respect to audits by Canada Revenue Agency officials, including requiring taxpayers to give reasonable assistance and to answer all proper questions for tax purposes; and
(u) extending the capital cost allowance for clean energy and the tax rate reduction for zero-emission technology manufacturers to include air-source heat pumps.
It also makes related and consequential amendments to the Canada Deposit Insurance Corporation Act , the Excise Tax Act , the Air Travellers Security Charge Act , the Excise Act, 2001 , Part 1 of the Greenhouse Gas Pollution Pricing Act and the Income Tax Regulations .
Part 2 amends the Excise Act, 2001 and other related texts in order to implement changes to
(a) the federal excise duty frameworks for cannabis and other products by, among other things,
(i) permitting excise duty remittances for certain cannabis licensees to be made on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2022, and
(ii) allowing the transfer of packaged, but unstamped, cannabis products between licensed cannabis producers; and
(b) the federal excise duty framework for vaping products in relation to the markings, customs storage and excise duty liability of these products.
Part 3 amends the Underused Housing Tax Act to make amendments of a technical or housekeeping nature. It also makes regulations under that Act in order to, among other things, implement an exemption for certain vacation properties.
Division 1 of Part 4 authorizes the Minister of Finance to acquire and hold on behalf of His Majesty in right of Canada non-voting shares of a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund and to requisition the amounts for the acquisition of those shares out of the Consolidated Revenue Fund.
Division 2 of Part 4 amends the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of foreign states.
Subdivision A of Division 3 of Part 4 enacts the Framework Agreement on First Nation Land Management Act .
Subdivision B of Division 3 of Part 4 contains transitional provisions in respect of the enactment of the Framework Agreement on First Nation Land Management Act and makes consequential amendments to other Acts. It also repeals the First Nations Land Management Act .
Division 4 of Part 4 amends the Government Employees Compensation Act in order to fulfil Canada’s obligations under the Memorandum of Understanding between the Government of Canada and the Government of the United States of America concerning Cooperation on the Civil Lunar Gateway.
Division 5 of Part 4 amends the Canada Student Loans Act to eliminate the accrual of interest on guaranteed student loans beginning on April 1, 2023.
It also amends the Canada Student Financial Assistance Act to eliminate the accrual of interest on student loans beginning on April 1, 2023.
Finally, it amends the Apprentice Loans Act to eliminate the accrual of interest on apprentice loans beginning on April 1, 2023 and to clarify when the repayment of apprentice loans begins during the interest suspension period from April 1, 2021 to March 31, 2023.

Fall Economic Statement Implementation Act, 2022

[Andréanne Larouche, Bloc, Shefford, QC]

Mr. Speaker, I thank my colleague. I enjoy working with her at the Standing Committee on the Status of Women as well.

As I said yesterday to the minister and as we can see, the management of our health care systems is the jurisdiction of Quebec and the provinces. I brought in some organizations during the study in committee. They came to tell us that there are plans on the table that cannot be completed because the organizations do not have the necessary funding. They are being forced to save money by cutting corners because the federal government is not paying its share.

Again, the government says it is championing health care, but it is still incapable of implementing genuine EI reform and it thinks that cancer can be dealt with in 15 weeks.

To come back to mental health, the government needs to leave that to Quebec and the provinces. I think that they already have a plan to address mental health problems and help the women and girls suffering from mental health challenges.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Mr. Speaker, I agree with my hon. colleague with regard to the crisis we are facing in our health care system. It is no secret that health care, whether in Alberta, British Columbia or Quebec, is facing a dire crisis. We are seeing hallway care prioritized and becoming far more common across the country, and we know the federal government must play a role.

The member spoke about the need for enhanced federal spending in our public health care system. However, what we are seeing in my province of Alberta is a concern that I hope she recognizes and shares with me. In Alberta, we are starting to see a decrease in public spending on health care and an increase in the allowance of private surgeries, which is something Canadians do not want.

We know we need a publicly accessible and publicly administered health care system. Does the member agree?

[Andréanne Larouche, Bloc, Shefford, QC]

Mr. Speaker, the Bloc Québécois believes the health care system must remain universal and free.

I think health transfers will breathe life into the system. This is important. It is crucial.

With respect to private medicine, as I said, the Bloc Québécois is in favour of universal free public health care. That is essential.

That means the federal government has to stop shortchanging the health care system, as it has been doing for far too long. We all know the Liberals and Conservatives have been making cuts since the 1990s. Let us reinvest in our health care system and give Quebec and the provinces the money they need to make good things happen and give sick people the care they deserve.

[Mario Simard, Bloc, Jonquière, QC]

Mr. Speaker, as always, you seem jubilant and you are in shape, so I will be pleased to talk to you about health.

As my colleague pointed out with respect to implementing the economic statement, we do not find the required measures in this bill to counter the reality that affects us today, that being inflation. Members can rest assured; I will not take the same direction as my Conservative colleagues. I do not think that the best way to fight inflation is to feed the gluttons in the oil and gas industry.

As my colleague demonstrated earlier, there are no measures to support seniors, either. This is very disappointing. We have been asking for that for many years now, almost three years.

I would say that the most glaring omission in the economic statement is the increase in health transfers. Whoever watched question period yesterday could see the Minister of Health's usual attitude when we spoke of health transfers, one that I might describe as “stubborn and arrogant”. This makes me want to dedicate all of my speaking time to these health transfers we keep hearing about.

I do not want to impugn the government's motives, but I know very well that, through their action, what the Liberals want in the coming weeks is to break the common front that has formed between the provinces in order to reach a cut-rate agreement. My colleague pointed that out earlier. However, the situation will not disappear that easily. The current situation is putting enormous pressure on our health systems. Mandatory overtime for nurses and population aging are but two of the factors that are putting pressure on the system.

I would first like to go back to why we have been making this request for health transfers for such a long time. Let us remember that this involves $28 billion, which would increase the government's share from 22% to 35%. If we put that into perspective, we know that when the health care system was first created in the early 1960s, for every dollar invested in health, 50¢ came from the federal government and 50¢ from the provincial government. What an interesting system. Health costs were divided fifty-fifty. That is no longer the case today. In Quebec, the government's share is barely 22%.

The pandemic has also played a major role in the drastic rise of health care costs, so much so that everyone now agrees that major federal reinvestments are needed. The Quebec National Assembly passed a unanimous motion in this regard. The circumstances are clear: there are needs. Everyone, except perhaps the Liberal Party, agrees that the federal government is not doing its part.

Now let me try to explain those economic circumstances. I have no choice but to revisit something that is quite annoying to the government and federalists in general, namely the fiscal imbalance. I am not sure if members recall the Séguin report. I am not talking about the guy who has a goat or about Richard Séguin, the singer; I am talking about Yves Séguin, who was a Liberal finance minister. He was not a sovereignist, nor was he trying to embarrass Canada. He simply gave a presentation on Quebec’s fiscal situation in relation to the federal government.

As the Séguin report so well said, the definition of fiscal imbalance, according to Yves Séguin, is as follows: the provinces’ spending structure is such that expenditures grow faster than the economy, while those of the federal government grow at roughly the same pace. Furthermore, when it wants to revise its spending, the federal government can simply act unilaterally by cutting transfers to the provinces with no other political consequences for itself.

I will come back to this often. We should keep in mind what he said: with no other political consequences for itself.

The federation’s major problem is that the federal government can strangle the provinces by cutting its transfer payments, and it never pays the price for that. Allow me to demonstrate this. We have seen the same thing consistently for 20 years, according to reports from the Conference Board of Canada and the Parliamentary Budget Officer, not just the Séguin report: The federal government rakes in surpluses, and it can balance its finances on the backs of the provinces without paying a price for it.

A 2013-14 Conference Board of Canada report stated that if nothing were to be done in subsequent years, which is what happened, the combined deficit of the provinces could reach $171 billion in 2034, while the federal government could amass surpluses.

This analysis predates the pandemic, of course, but it does demonstrate that even a neutral organization like the Conference Board of Canada realizes that the fiscal imbalance does exist. The Parliamentary Budget Officer also reported that over the next 25 years, Quebec's revenues will probably be 0.6% less than its spending, while the federal government's revenues will increase rather than decrease.

This does not come from a member trying to provoke the government, but from neutral entities. Canada has a fiscal imbalance problem, and it is usually addressed by cutting transfer payments.

That brings me to our friend, the Minister of Health. He has come out in the last two weeks saying that he is acting in good faith. I would like to see if my colleagues think the Minister of Health is acting in good faith in making these statements. When talking about unconditional transfers, he said, and I am paraphrasing, that all they want is a cheque made out to their finance minister with no strings attached. That is not a plan.

As for sending a cheque to the provinces without a plan, with no strings attached, is it the role of the federal government to establish a health plan? I would simply like to point out that the provinces have exclusive jurisdiction over health, with the exception of military hospitals, quarantines, indigenous health and drug approvals. The provinces have exclusive jurisdiction over everything else. Why would the federal government want to come up with a plan of its own?

In my view, the plan should come from the people who have expertise in this field. Who has expertise in health care? It is the people who work in the system, people from within the sector. The Minister of Health has said we need to let health professionals do their jobs. I find that interesting. Perhaps we also need to listen to what they are saying. I do not know if my colleagues recall, but with my colleague's help, we got all the stakeholders in the health sector together: physicians' associations, medical specialists, people who work in public health and the major unions. We brought together all kinds of health care personnel. They came here to Ottawa and told the government that it needs to increase transfers. Why will the Minister of Health not listen to those individuals?

The Minister of Health said we must work together to ensure that patients get the care they need, where and when they need it. I will take the minister at his word. If he wants us to work together, why does he refuse to do what we have been asking of him all along, which is to hold a health summit?

The minister also talks about old ways of doing things. However, the current health care crisis shows that the old ways of doing things do not work. When he talks about old ways of doing things, do members know what it makes me think of? It makes me think of the Liberal government's ongoing cuts. In 1997 and 1998, the government cut $2.5 billion a year in provincial health transfers. Who paid the price at the time? It was Lucien Bouchard. The same thing was done when a Liberal government was in office. Who paid the price? The Couillard government had to bring in austerity measures.

What is worse, the Minister of Health is talking about effectiveness and results. He basically said that before we can talk about money, we need to agree on the objectives. I can give him objectives for immigration, passports, insurance and old age security. There are 70,000 new retirees who are waiting for their cheques. Worse still, the Liberals implemented a dental cheque scheme that is going to be twice as hard for Quebeckers to access.

The culmination of this bad faith is the futile debate. The Minister of Health told us that this debate is futile. The day that the federal government has to invest 42% of its budget in a single budget item, then it can tell me that this debate is futile.

This means that the remaining 58% of Quebec's budget must cover everything else: education, the fight against poverty, child care, infrastructure, municipalities and support for Quebec businesses. Quebec only has 58% of its budget to cover all that. It feels that it is still not enough.

In closing, I would like to say that I had a lofty goal in life, that of making my son and my wife happy. Now, I have another goal, which is to hold the Liberal government to account for all the terrible things it is doing in the area of health care.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Mr. Speaker, I thank my colleague for his presentation, and I know he is not going to like what I am going to say.

He likes to talk about the 22% health transfer, but I do not know if he is aware that in 1977, which may be before he was born, the federal government transferred tax points to all the provinces. The federal government reduced its tax room and transferred it to the provinces. If we take into consideration the tax room acquired by Quebec and the other provinces, the federal government's contribution to health is actually 33%.

Is my colleague aware of the historic 1977 decision to transfer tax points?

[Mario Simard, Bloc, Jonquière, QC]

Mr. Speaker, I am indeed aware, but I feel like asking my colleague whether he is aware that since 1977, health technologies have advanced and the tax points given in 1977 are no longer adequate.

Is he aware that the Séguin report came long after 1977? Is he aware that the reports from the Conference Board and the Parliamentary Budget Officer that prove that the federal government is not paying its share came long after 1977?

It is unacceptable today to know that only 22% of health care funding comes from the federal government.

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, I listened with great interest to the speech of my colleague from the Bloc, and in particular the conversation around the fiscal imbalance of it. In the context of Alberta, there certainly is a significant fiscal imbalance between transfers going into the federal system and what are being paid out.

More specifically, my question for the member from the Bloc is related to how the Liberals have been hedging a lot of their policy decisions, and we saw a continuation of this in the fall economic statement, on Ottawa determining how provinces should do A, B, C, or D. That flies in the face of what our federation is supposed to be and it is certainly contrary to the work of many provinces. I know there was a meeting with health ministers this past week.

I would be curious to hear his thoughts on how Ottawa should stick to what Ottawa does best and let provinces do what provinces are supposed to do.

[Mario Simard, Bloc, Jonquière, QC]

Mr. Speaker, I completely agree with my colleague. Respecting jurisdictions is one thing that could improve the federal system, which is completely dysfunctional. Unfortunately, we have a government that is very centralist when it comes to health. We now have a Minister of Mental Health. I did not know that was a federal responsibility.

I completely agree with my colleague. Things would be better if the federal government respected its jurisdictions.

[Lori Idlout, NDP, Nunavut, NU]

Uqaqtittiji, I would like to ask about the Inuit in Nunavik in northern Quebec who suffer quite similar health disparities to my constituents in Nunavut. What does he have to say about ensuring improvements can be made to address the health disparities suffered by Inuit in northern Quebec?

[Mario Simard, Bloc, Jonquière, QC]

Mr. Speaker, to be honest, I think the first thing that needs to happen is for the Minister of Health to understand that this is not just about who has the power. There are real needs on the ground. Unfortunately, the federal government does not have the skills to analyze those needs. It has to listen to health experts and it has to listen to the provinces.

That is not what it is doing right now. What it is trying to do is make sure it can balance its budget at the provinces' expense.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Mr. Speaker, I would like to recognize that I am appearing virtually and that I am very fortunate to live, work and play on the traditional territories of the Musqueam and Coast Salish peoples.

I will be sharing my time with the member for Ottawa West—Nepean.

We live in serious times. The world continues to grapple with the economic effects of the pandemic. The Russian invasion of Ukraine rages on, costing tens of thousands of lives, and continues to distort the world economy.

Climate change continues to cause droughts and extreme weather events around the world. We saw the devastating impact of the atmospheric river in my home province of British Columbia and, more recent, the disproportionate harm witnessed in nations like Pakistan.

Inflation and rising interest rates are a challenge for millions of Canadians, for our friends, our families and our neighbours. No nation is immune to these effects and Canada is no exception. As leaders, we must be candid about the future and that is exactly what the Deputy Prime Minister and Minister of Finance has done in this year's fall economic statement.

Canada cannot avoid the global economic slowdown coming our way any more than we could have prevented COVID from reaching our shores once it had begun. Again, as leaders, we must be able to adapt, adjust, revise and modify accordingly.

The fall economic statement lays out a fiscal and economic road map that is targeted, practical and responsive to the current and future needs of Canadians. It takes advantage of Canada's strengths, our record-low unemployment rate, a shrinking deficit, our AAA credit rating, the lowest net debt and deficit-to-GDP ratios and the strongest growth in the G7. We have witnessed historically low unemployment rates. Just last month, the Canadian economy added over 108,000 jobs.

Due to the Government of Canada's strong fiscal position and outperforming provincial economies, we are still capable of making strategic investments, investments in programs like the Canada growth fund, which will help to attract billions of dollars in private capital to create even more well-paying jobs and support Canada's economic transformation.

This year alone, auto manufacturers have committed to billions in private investment to retool our auto sector, to produce EVs and batteries.

The Canada growth fund will help target these kinds of opportunities to attract private investment.

Ensuring Canadian businesses remain competitive is critical if we are to attract private investment and grow the economy. Building upon billions of dollars of net-zero investment since 2016, the government will implement a refundable tax credit equal to 30% of the capital cost of renewable technology. From power generating and storage systems to low-carbon heat equipment and industrial zero-emission vehicles, helping Canadian businesses go green is not just good for the environment; it makes good economic sense.

To make this transition a reality, Canada must have a steady supply of skilled workers. That is why we are continuing to invest in Canadian workers.

Starting in 2023 to 2024, the fall economic statement proposes to invest $250 million over five years to help ensure that Canadian workers can thrive in a changing global economy. These investments would include the sustainable jobs training centre that would bring unions, employers and training institutions together. The centre will target areas of high demand, such as sustainable batteries and low-carbon building, as well as help forecast future skills requirements and develop on-site learning to train 15,000 workers.

A new sustainable job stream under the union training and innovation program will support unions in leading the development of green skills training for workers in the trades. It is expected that 20,000 apprentices and journey persons will benefit from this investment.

Finally, the government will create a sustainable jobs secretariat to offer a one-stop shop for workers and employers. That will provide the most up-to-date information on federal programs, funding and services across government departments, as Canada works to build a low-carbon economy with opportunities for everyone.

Most of these policies are long-term solutions, but we know Canadians need help with affordability and housing now. That is why we are rolling out a new dental care plan, starting with children under 12, to help families save this year. The government is also doubling the GST tax credit for six months and will start issuing advance payments of the Canada workers benefit in July.

To help more Canadians buy their first home, we are doubling the first-time homebuyers' tax credit, and we have the tax-free first-home savings account. We will also help increase the supply of housing by banning foreign buyers for two years as of January 1 and by taxing underused housing to limit speculation in the housing market.

To help Canadian students, we have doubled the Canada student grant and are permanently eliminating interest on Canada student loans and apprenticeship loans. The government is committed to supporting young Canadians in the economy. That is why the fall economic statement commits over $800 million to the youth employment and skills strategy over the next three years.

Immigration is core to our identity as Canadians, while also being a key driver of Canada's economic growth. Helping Canadian businesses access the skilled workers they need now is essential to reducing the labour gap. That is why the government is investing an additional $50 million in our immigration system and hiring 1,250 new employees. These resources will help tackle backlogs and increase processing capacity, allowing for skilled newcomers to fill critical labour gaps faster.

We stand at a pivotal moment in our history, indeed, in our world history. Climate change continues to threaten the way of life for millions around the world and in Canada. The global economy is still feeling the effects of the pandemic, which is being further aggravated by Russia's ruthless invasion of Ukraine. It is in times like these that Canada has stepped forward to lead.

The future of our earth and our children depends on transitioning away from fossil fuels and toward a green economy. Canada must be a leader in sustainable technology if we are to secure the fruits of this economy. The fall economic statement builds on the billions of dollars in past investments in clean technology and is a clear commitment to ensuring Canada's global competitiveness by continuing to invest in our net-zero economy.

Having the vision to introduce and implement solution-based ideas brings progress, and Canadians elected this government to bring about progress. That is exactly what the fall economic statement would deliver.

[Frank Caputo, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, it is always a pleasure to rise on behalf of the people of Kamloops—Thompson—Cariboo.

I listened to my colleague's speech in which he spoke about climate change. What he did not speak about is affordability. I understand that we certainly do need to recognize climate change, and I look forward to my party leader's plan, which I know will inspire confidence among all Conservatives and hopefully all Canadians. However, how does the hon. member heat his house? How do his constituents heat their houses? What I am hearing from people is that they cannot afford to heat their houses because of tax upon tax, taxes that the member and his party support.

It is a simple question. How does the member heat his house?

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Mr. Speaker, I thank the member from Kamloops. It is a beautiful place in British Columbia, and I enjoy going there.

We absolutely understand that times are tough for so many Canadians today. Over the last couple of months, our government has put forward plans to provide a $500 top-up to the Canadian housing benefit, provide up to $1,300 through the Canada dental benefit for low-income kids under 12 and double the GST tax credit for six months.

As Canadians and the Canadian economy contend with global challenges, our fall economic statement builds on this responsible fiscal plan. It proposes new targeted measures to support Canadians, such as the ones he is talking about, who need it the most and grow the Canadian economy.

This includes permanently eliminating interest on federal student apprenticeship loans and the launching of the new Canada growth fund, which will help bring Canada billions of dollars in new private investment required to reduce our emissions, grow our economy and create good jobs.

We are creating a new quarterly Canada's workers benefit with automatic advanced payments and delivering on key pillars of the government's plan to make housing more affordable, including the creation of the new tax-free first home savings account and a doubling of the first-time home buyers' tax credit, ensuring that property—

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, on a point of order, I believe the member has already had his 10-minute speech. We do not need another one. Perhaps we could get onto some questions from members in the House.

[The Deputy Speaker, Conservative, Chris d'Entremont]

I will remind all members of the House that the shorter the questions, the shorter the answers, and the more people who get to participate in the debate. I will remind folks to answer the questions. Let us ask quick questions and give quick answers.

The hon. member for Longueuil—Saint-Hubert.