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

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

For one true measure of a nation is its success in fulfilling the promise of a better life for each of its members. Let this be the measure of our nation.

Madam Speaker, as I was listening to the fall economic statement, I thought of the words of President John F. Kennedy in his message to Congress in February 1962. I thought it was important to measure this fall economic statement against whether it has in fact improved the lives of Canadians. It is important to think about the layers of hype and peel all that back over the last seven years of the government to see what the results are.

Has the government been good value for money for the Canadians who pay for it? We know that seven years ago the Prime Minister promised annual deficits, but said they would be very small, not too big, and not to worry about it. Of course we know that did not really work.

COVID-19 came along, and the Prime Minister promised to have Canadians' backs. All of us in the House came together and we had Canadians' backs. We had to borrow money to do it, but the $200 billion extra that the government borrowed was not necessary. That was not having Canadians' backs. Thanks to the words of the former Bank of Canada governor, Mark Carney, we now know that this extra borrowing, this extra abuse of the national credit card, is exacerbating inflation and making things more expensive. It is in fact quite the opposite of having Canadians' backs. It is taking the shirts right off Canadians' backs. It is causing inflation to get worse.

On top of that we have the Liberal government promising that its carbon tax would reduce our greenhouse gas emissions, and that most Canadians would get more money back than they pay in carbon taxes. Now we know from the Parliamentary Budget Officer that the carbon tax will in fact cost Canadians more than they get back, and the carbon tax has done almost nothing to reduce greenhouse gas emissions.

However, people should not worry. The Liberals are coming to the rescue. For those who are struggling to heat their homes and feed their families, the Liberal government is going to save them by now tripling the carbon tax. Members can just imagine what it will cost people to heat their homes and buy food once the government triples the carbon tax.

For some Canadians, the Liberals plan to send them $500 for things that now cost thousands more. The price of food is up 11%, and food bank visits are at record highs in Canada. The price to heat our homes has doubled, particularly in eastern Canada and northern Ontario, where too many Canadians are facing energy poverty. Are they getting value for money? I do not think so.

Nowhere has the Liberal failure been more horrifying than on the topic of housing. We know that in 2017 the Prime Minister launched to great fanfare his national housing strategy. He was in Toronto, standing right in front of the mayor of the city. He was going to have this first-ever national plan. He promised $40 billion, and then he upped it to $70 billion. He called it a once-in-a-generation vision that would protect current affordable housing stock, build four times as many units as in the decade past, repair three times as many units as were repaired in the decade past, and reduce chronic homelessness by 50%.

The Prime Minister called it a robust, comprehensive, life-changing plan that would help Canadians get into homes and stay there. How has that worked? Have Canadians received value for the money they have paid the government on housing?

Let us look at the facts. The headline number was $70 billion. We know that in fact it was not really $70 billion. When we pull away from that the existing federal spending commitment and then pull away from that the matching provincial dollars that were required, which they were already spending as well, and then take out the loans and other tools that were being used, the number was actually $6.8 billion over 10 years.

That is fine: $6.8 billion is still $6.8 billion. That is great stuff; am I right? Maybe. That money was supposed to be spent through the Canada Mortgage and Housing Corporation, through five main programs: the rental construction financing initiative, the national housing co-investment fund, the rapid housing initiative, the affordable housing innovation fund and the federal lands initiative. How have they done since 2017?

The Parliamentary Budget Officer reported in 2021 that despite the overall increase in spending to help particularly low-income Canadians, it is up to $192 million a year, or a 9% increase. Because of the Liberals' inflationary spending, that actually represents a 15% decrease in the power of those dollars to buy goods. The CMHC programs that were designed to contribute to the cost of construction to address homelessness included the national housing co-investment fund, which spent 50% of its allocated budget. The rental construction financing initiative spent 53%. With respect to Employment and Social Development Canada funds to address homelessness, they have increased that budget dramatically from $118 million a year on average to $357 million per year. That is a 203% increase.

It is amazing; am I right? Not so fast. The Auditor General now reports that the CMHC and Employment and Social Development Canada have no idea if their programs are even helping. They do not know whether they have made a difference or not. What a plan it is. They spend half the money that was committed, do nothing to monitor the grandiose commitments of the Prime Minister and tell Canadians that everything will be fine. However, we know. We know the proof is in the suffering. House prices have doubled since the Prime Minister announced sunny ways in 2015.

A report by the C.D. Howe Institute, named after a fellow who knew how to get things done in this country, cited the burden of government cost as one of the big reasons for our lack of housing supply. In some major cities like Kelowna, Regina, Toronto and Ottawa, homebuyers had to pay an average of $230,000 extra for a home because of the municipal costs. In Vancouver, that number is $644,000. Big, expensive government is getting in the way of new construction. It is getting in the way of retrofits and renovations. It is getting in the way of new rental units. It is getting in the way of accessible and affordable units. It is getting in the way of a person's ever owning a home.

This is all while the government asks people to pay more, earn less and pay higher taxes to cover its ballooning debts. The PBO reported in September that the housing affordability gap, which is the gap between the average price of a house in Canada and the ability of the average family to borrow money, is a whopping 67% now. For the record, in January 2015, just months before the current government took office, that gap was 2%.

It is all made worse by a government that, when it is not bent on its misguided ideological entrenchment, just does not seem to get the job done. The Liberals talk a big game. The Prime Minister peers into the camera with empathetic eyes and says he really cares, but then he does not get the job done.

It seems like a cruel joke, but to the people in this country, those most vulnerable, who are paying the highest price, it is far from a joke. There are seniors on fixed incomes who cannot afford to heat their homes and eat healthy food. Tent cities are growing in communities large and small, all across our country. The current government has failed Canadians. Never has so much been promised and spent and borrowed to deliver so little. The economic statement that we have heard here is more of the same.

The Leader of the Opposition has been warning about excessive government borrowing and that it would lead to inflation that would make everything we try to buy more expensive, and now we know he was right. Even the Minister of Finance knows he was right. In a road to Damascus moment, she actually started to speak about fiscal restraint. However, she only talked about it, because immediately thereafter, she added another $20 billion of debt to her $1.2-trillion debt. Next year, payments on the national debt will be more than we spend on health care transfers.

Canada cannot afford to throw money in the air anymore and just hope it sticks. If we are really interested in supporting the next generation and making sure their life is better than ours, by that measure this economic statement is a failure and the government is a failure. Frankly, we should be voting against this economic statement. Conservatives will vote against it, and every single member of this House should do the same.

[Mark Gerretsen, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons (Senate)]

Madam Speaker, I must admit I am slightly taken aback by the member's intervention today, although I am not surprised, because I continually hear the same thing from Conservatives. Conservatives like to portray themselves as the saviours of the economy. As one of my colleagues said earlier, they like to think they are the be-all and end-all when it comes to economic and monetary policy.

We know that as the individual by whom this individual is led in the House and in the Conservative Party, the Leader of the Opposition's solution to investing and to the Canadian dollar was to get away from the Canadian dollar and move towards Bitcoin. I wonder if this member would—

[The Assistant Deputy Speaker, Carol Hughes]

The hon. member for Joliette on a point of order.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Madam Speaker, the interpreter says there is feedback. The member might want to remove his earpiece and move it away from the microphone.

[The Assistant Deputy Speaker, Carol Hughes]

The hon. member can move the earpiece away from the microphone, and we will stop the clock. I think he needs to apologize to the interpreters as well.

The hon. parliamentary secretary has the floor.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Madam Speaker, the first thing I need to do is apologize to the interpretation staff. I tried to put it on my seat, but accidentally set it right next to the microphone this time.

My question to the member is quite simple. What is his position on cryptocurrency? We know the position of the Leader of the Opposition. I know this member ran to be the leader of the opposition and must have engaged in dialogue on this during that campaign. Where does he stand on cryptocurrency as it relates to being an alternative to the Canadian dollar?

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Madam Speaker, I can assure the member that when I was running for leader of this party and criss-crossing the country, Canadians were not talking to me about that. They were talking to me about what it costs to live in this country and the abysmal record of the government. That is what we are here to talk about, frankly, not what somebody else may or may not have said about anything.

This is about the Liberals' record. This is about their failures. This is about the fact they have spent more money than any government in the history of this country. The housing situation specifically, which I have talked about a lot, is worse today than it was seven years ago, despite the grandiose promises.

I do not care what the member talks about. The fact of the matter is that the Liberals' record is an abysmal failure and Canadians deserve better.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Madam Speaker, I really enjoyed my colleague's speech on housing. It was very thoughtful, well-documented and well-written. He hit the nail on the head. The government's housing strategy includes a lot of numbers and promises, but it does not actually do much.

Let us talk solutions. The rapid housing initiative works fairly well because it fully funds projects. The program also makes it possible to build housing quickly.

Organizations tell us that all the other programs, such as the national housing co-investment fund and rental housing programs, which primarily offer loans, need to change. That money should go to not-for-profits so they can buy private property and get it off the market to ensure longevity. Does my colleague agree?

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Madam Speaker, it is a really great idea. In fact, what we need to have here is a situation in which all levels of government are working together. Let us not kid ourselves. Municipalities and to a smaller degree provinces are the front lines of the housing crisis in this country. The federal government has a role to play in working with municipalities and provinces and, frankly, with the private sector. This country requires trillions of dollars of investment in the housing sector. We need the private sector on board. We need community groups on board. We need to be all working together to solve this crisis, not pandering to grandiose fixes but getting to work and working together to solve the problem.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Madam Speaker, I asked this question of one of my colleague's Conservative colleagues and did not get much of an answer, so I will pose it to him. There was interesting news coming out of the United Kingdom today, where the Conservative government of that country announced it was increasing the windfall tax rate on highly profitable oil and gas companies to 35%. It is doing that because it realizes the amount of money they are making is simply unfair to the British people.

Why is it that the U.K. Conservatives have the courage to do something like this but I do not hear anything from Canada's Conservatives, when we have the exact same problem affecting our two nations?

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Madam Speaker, I am not going to get trapped in the ideological entrenchment of the NDP, but the fact of the matter is that the Liberal government collects billions and billions of tax dollars and promptly wastes it. Instead of collecting more taxes from companies and hard-working Canadians, I suggest we get rid of the government, put a Conservative government in place, and actually spend their money wisely.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, it is always a pleasure to rise in this chamber and bring the voices of the constituents of Chatham-Kent—Leamington to this place, and it is an honour to speak to Bill C-32, the fall economic statement implementation act.

The Conservative Party had two asks going into the fall economic statement process. One was to stop the tax increases and have no new taxes, which includes cancelling all of the planned tax hikes and the tripling of the carbon tax. The other was to stop the spending and have no new spending, and ensure that any new spending by ministers or ministries is offset by equivalent savings found elsewhere. We need to cut the wasteful spending and stop the inflationary deficits that drive up the cost of living. Of course, none of our demands were met in the fall economic statement, and for that reason, the Conservatives, me included, will not be supporting it. I know that is a shock to the members opposite.

The cost of government spending is the main driver of the increasing cost of living. As stated by a colleague in an earlier speech this week, Canadians now have to make tough decisions. Why? It is because the government did not make tough decisions.

Of course, the pandemic required extra spending. The Conservatives knew that and supported the early programs. However, $200 billion of it, almost half of the $500 billion of added debt, was not pandemic-related. Program spending by the government is now 30% above prepandemic levels. It is amazing.

Last week I was in my riding and hosted a series of coffee meetings over two days to hear from constituents. I was just talking about the rising cost of living, and that is exactly what I heard from my constituents. Over and over again, the rising costs of everything, particularly food, fuel and housing, were highlighted. Last month it was reported that there was 11.4% food inflation. This month the rising cost of food is reported as being 10.7%. That is what Canadians are facing when they make a trip to the grocery store.

While rising inflation is causing pain for Canadian families in their everyday lives, it has boosted the tax revenues of the government. One would think there would have been an opportunity in the fall economic statement to bring some fiscal responsibility to budgeting.

I am not an economist, but let me share some thoughts from some respected voices on the fall economic statement. I will begin with Douglas Porter and others from BMO Capital Markets, who stated:

Less than half of this year’s revenue windfall will make it through to an improved bottom line. Moreover, the double-whammy of slower (or no) growth and rising interest rates will limit flexibility into 2023.... [T]he boost to government finances from higher inflation is temporary. Eventually, costs do catch up to the run-up in prices, and revenues get crimped by the economic slowdown. Accordingly, after a nice run of better-than-expected fiscal outcomes, Ottawa’s finances are expected to turn more challenging next year.

Will the government look ahead and plan accordingly? Obviously from prepandemic times we know that it did not.

The House resumed from November 17 consideration of the motion that Bill C-32, 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, be read the second time and referred to a committee, and of the amendment.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, it is a pleasure this morning to continue to put some thoughts on the record regarding the fall economic statement implementation act.

Seven years ago, the current government inherited a balanced budget and a robust economy, but instead of maintaining balance or even paying down some debt, let us consider that for a moment, perhaps to prepare for the unknown, such as a pandemic or an unexpected war, it immediately began to add more spending, took the government finances back into a deficit and again started to add to the debt.

Then came the COVID–19 pandemic, which required additional spending. We supported those early programs. However, of the half a trillion dollars, yes, $500 billion, of added debt by the current government, $200 billion was not pandemic-related.

Program spending by the current government is now 30% above prepandemic levels. We now have structural deficits presently embedded in our finances, and of course the more that the government spends, the more things cost.

When the current government came to power seven years ago, it promised transparency. Do members remember “sunny ways”? This is what its own Parliamentary Budget Officer had to say on the transparency of the fall economic statement:

In this year’s FES, the Government identified $14.2 billion in new measures without providing specific details on this spending....

This lack of transparency presents challenges for parliamentarians and the public in scrutinizing the Government’s spending plans, particularly given the magnitude of measures, $14.2 billion—the largest amount announced without specific details since the 2016 [FES].

On top of all the other spending already outlined, the $20 billion, the current government is now asking the House for a $14.2 billion blank cheque. Are these sunny ways? Hardly. We will not be supporting this.

In my remaining time, I want to spend some time on one issue that is not addressed in the fall economic statement.

Last week, I had a series of eight meetings with my own constituents. The primary issue I heard from them was the rising cost of living, particularly the costs of food, fuel and housing. Those are the main things I heard, and in particular, food. Last month, as we are all now aware, there were 1.5 million visits to food banks, that in the country of Canada, a country that is considered a breadbasket.

The FES missed an opportunity to address an issue that has the potential to lower food costs, namely the status of the implementation of a grocery code of conduct.

First, we have heard much in statements in the media today about two seemingly contradictory statements, record grocery retailer profits and the counter-argument from industry that retailer margins have not changed in percentage terms through the pandemic. Both statements can be true, as retail volumes have increased during the pandemic as consumers have shopped more retail versus the food service that supplies the restaurant trade and institutional trade.

Second, the carbon tax, along with other issues, that is applied to the delivery of farm inputs and outputs, and to transportation all up and down the food chain, has increased costs for suppliers. Retailers maintaining their margins in percentage terms are applying this margin to a higher cost of goods from suppliers and to higher volumes generated by the change in market from consumers.

However, there is an opportunity for us to accomplish many goals if we get it right. What do I mean by getting it right? We can increase profits for food manufacturers and processors because of fair trading practices, and we can reduce the administration costs in attempting to comply with the many “rules” applied by retailers in an updated code of conduct. We can reduce administration costs for retailers in all these programs that are allegedly used as profit centres, but most importantly we can reduce consumer food costs.

Right now, shelf listing fees, fines for short or late deliveries and a host of other administrative exercises are adding costs that eventually the consumer pays. The U.K., Ireland and Australia have all gone down this road of a grocery code of conduct. Retailers were afraid that imposing a code would lead to a reduction in the number of retailers with gross sales meeting the threshold for application of the code. The U.K., since fixing its original voluntary attempts, has seen more retailers. It started with 10 and now has 14 retailers meeting the threshold dollar value, so the code has not driven consolidation there.

In conclusion, an appropriately structured code results in lower consumer prices and fairer trading practices within the value chain. In addition, it allows 10,000 independent grocers, who are so crucial for rural parts of our country, to be treated on par with the big five that control 85% of the grocery retailer trade.

The fall economic statement missed an opportunity to advance this issue for Canadians. Instead, the statement adds more government spending, which would only lead to higher inflation over time and the hurting of our most vulnerable citizens. With that I will conclude, and I look forward to questions.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Madam Speaker, only in an alternative reality would the Conservatives think that they are fiscal stewards. They ran nine straight deficits. They tried to balance the budget by throwing in the sale of stock and an EI rainy day fund in 2015. We all know, and Canadians know, that is not true.

In the fall economic statement, there are three things my constituents love: first, the doubling of the GST rebate for six months; second, the top-up for rent; and third, the waiving of interest on student loans. Which one of those programs will he actually tell his constituents he does not support?